Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — EMPLOYMENT AND PRODUCTIVITY

Children and Young Persons

Mr. Gwilym Roberts: asked the Secretary of State for Employment and Productivity if she will seek to amend the parts of the Factories Acts and other legislation which restricts the work experience of schoolchildren; and if she will make a statement.

The Under-Secretary of State for Employment and Productivity (Mr. E. Fernyhough): The law on the employment of children and young persons concerns a number of Departments, which are considering the legal and safety problems relating to work experience schemes. Any contemplated amendment of the Factories Act would first have to be discussed with employers' and workers' organisations.

Mr. Roberts: Does my hon. Friend accept that knowledge of the industrial scene is an integral part of the education of children in their latter years at school and that this will become even more important if the school leaving age is raised? Will he put the same pressure on the C.B.I. and T.U.C. in this matter as is being done in other directions, for example, in connection with trade union legislation?

Mr. Fernyhough: I am not unsympathetic to that suggestion, which is, after all, virtually a recommendation of the Newsom Report. My hon. Friend will agree that in a matter of this kind it is vital than we should carry with us both sides of industry. We will be conducting

negotiations with them and I hope that, when they are concluded, my hon. Friend will not be disappointed.

Left-handed People

Mr. Gwilym Roberts: asked the Secretary of State for Employment and Productivity what she estimates to be the numbers of employed people who are left-handed; if she will publish in the OFFICIAL REPORT any available breakdown; and if she will initiate an investigation into the increases in productivity which may be achieved by introducing left-handed working arrangements for left-handed people.

The Under-Secretary of State for Employment and Productivity (Mr. Harold Walker): My Department has not made any such estimates, but some current research suggests that about 5 per cent. of the population is completely left-handed, and many more have some degree of left-handedness. Most left-handed persons adapt themselves to existing machinery and plant layout and I have no evidence that the problems of such persons are a sufficient obstacle to increased productivity to call for a special investigation.

Mr. Roberts: Is my hon. Friend aware that my experience completely contradicts the latter part of his Answer? Is he further aware that in industry the production of an individual or even the production of a team is often hampered by the left-handed person who finds himself in difficulty in a right-handed world? Does he appreciate that this is a serious matter which needs attention not at individual firm level but at Government level to ensure that help is given in terms of machines and industrial working layouts?

Mr. Walker: I am sure that my hon. Friend's experience also tells him that the same equipment would invariably have to be used by right-handed people; in other words, if machines were altered to suit left-handed people, the problems which now afflict them would tend to afflict right-handed people. The difficulties which my hon. Friend has in mind are quite well known in industry and I do not believe that the cost of further investigations would be justified by the net results.

Mr. Biggs-Davison: Which handed is the Secretary of State for Social Services?

Industrial Relations (Proposed Legislation)

Mr. Biffen: asked the Secretary of State for Employment and Productivity what consultations she is currently conducting on her proposed legislation on industrial relations; and when she proposes to present the Bill.
19. Captain W. Elliot asked the Secretary of State for Employment and Productivity when she will introduce an Industrial Relations Bill.

Mr. Edward M. Taylor: asked the Secretary of State for Employment and Productivity if she will make a statement on the consultations she is conducting on the subject of the proposed legislation on industrial relations.

The Secretary of State for Employment and Productivity (Mrs. Barbara Castle): The Government are consulting the T.U.C., the C.B.I. and representatives of the nationalised industries and local authorities about the proposed interim Industrial Relations Bill. I hope to introduce the Bill as soon as possible.

Mr. Biffen: As a result of the proposals of the T.U.C., is it now the right hon. Lady's intention to introduce a Bill which does not, even in a modified form, propose to include those clauses which her hon. Friends have described as penal?

Mrs. Castle: The discussions which we have been having with the T.U.C. have shown that the T.U.C. has gone a very long way, and we welcome this. There still are, however, differences between us and these will be the subject of further consultations. I believe that it would be most unwise of me to try to foresee the outcome of those discussions.

Captain Elliot: Is the right lion. Lady aware that after all these years—after a Royal Commission and with time now running out—the spectacle of all this feverish haggling between the Government and the T.U.C. is gravely damaging the national interest? Will she please announce the Bill forthwith?

Mrs. Castle: I cannot accept that grotesquely distorted picture of what is happening. On the contrary, the country welcomes that fact that the Government

and the T.U.C. are now in constructive and meaningful discussion as to how to improve industrial relations in Britain. This is exactly what everybody wants.

Mr. Taylor: Is it the position that the right hon. Lady would like, if possible, to avoid legislation in the event of meaningful proposals being put forward by the T.U.C.? In her discussions with employers, has she gained the impression that many employers would, in practice, be prepared to use the so-called penal clauses against their employees?

Mrs. Castle: My aim and that of the Government is to improve industrial relations and reach a situation in which we can get increasing recognition of the need to observe bargains which are freely struck. This is the aim, and we have had, in the response from the T.U.C., encouraging signs of co-operation. It would be most unfortunate if Questions in the House were to try to damage the outcome of those discussions.

Mr. Heffer: Would my right hon. Friend accept that many of us welcome the fact that the Bill will not be published until after the special congress of the T.U.C. on 5th June? Would she assure us that, in considering the penal clauses, she will consider seriously the events in Australia where there is industrial chaos as the result of such clauses and, second, the overwhelming evidence provided by Professor Turner in his book that there is no necessity for this type of legislation in Britain?

Mrs. Castle: Of course, the legal sanctions which obtain in Australia are quite different from those which we have proposed in our legislation, and that would be a false analogy to draw. On the first part of the question, I repeat that we do not intend to introduce the legislation, not only until after the special congress, but also until we have had further discussions with the T.U.C. in the light of the special congress.

Mr. James Hamilton: Will my right hon. Friend assure us that she will not allow herself to be stampeded by the Opposition or the Press? Will she further assure us that she will try to reach an agreement with the T.U.C., since we on this side realise that, given any Government co-operation, only the T.U.C. can solve our industrial problems?

Mrs. Castle: I can give my hon. Friend a firm assurance that I will not be stampeded by anyone. I agree with him that the co-operation of the T.U.C. is vital in the whole industrial relations exercise. The Government appreciate the spirit in which the T.U.C. is approaching these negotiations.

Mr. R. Carr: Would the right hon. Lady assure us that her worthy determination not to be stampeded by anyone includes the Leader of the House? Would she bear in mind the fact that the House will need an adequate time between the publication of the Bill and its debate on it?

Mrs. Castle: Of course I appreciate that. The right hon. Gentleman will understand that that is a matter for the Leader of the House.

Mr. Arthur Lewis: asked the Secretary of State for Employment and Productivity whether, in the forthcoming Bill on Industrial Relations, she will seek provision to deal with the interference with output and production caused by company directors and higher paid executives absenting themselves from work to go to golf matches and horserace meetings; and whether she will also provide for financial penalties for such absenteeism.

Mr. Harold Walker: As my right hon. Friend announced in the House on 16th April, the Bill will impose restrictions on strikes and lock-outs in defined circumstances. It is not intended to deal with interruptions of work from other causes.—[Vol. 781, c. 1184.]

Mr. Lewis: That reply was not unexpected. Can the Minister explain what will happen if workers decide not to go on strike, but just to go to a horse race meeting, or to go golfing, while their wages are discussed? How will the Government deal with this in the Bill?

Mr. Walker: It is my experence, and I am sure it is that of my hon. Friends, that when workers are on strike, they say so; otherwise, it becomes pointless. The Bill is intended to deal with people absent from work due to strike and for no other reason.

Mr. Frederic Harris: Even if there were anything sensible in this ridiculous Question, would it not be fair to say that the

hon. Member for West Ham, North (Mr. Arthur Lewis) is the last person to ask it?

Mr. Bidwell: asked the Secretary of State for Employment and Productivity what progress she has made in her discussions with the Trades Union Congress representatives on the use of a special fund collected from unofficial strikers; and if she will make a statement.

Mrs. Castle: This is one of the suggestions I am discussing with the T.U.C. in our consultations on the interim Bill.—[Vol. 781, c. 1186.]

Mr. Bidwell: As discussions on this point have apparently not yet taken place, which indicates a shyness on the part of my right hon. Friend to raise this specific matter, and as the T.U.C. has apparently not yet been allowed to say what she can do with such collections, does that not show that this will never be "on" and that it is best to rely on the T.U.C. intervening in industrial relations, especially to expose shoddy management, rather than to involve any concept of State penal law?

Mrs. Castle: I cannot say that I am conscious of any shyness about this point. It would be wrong of me to say here and now that this was not "on" because it is now before the T.U.C. as part of the consultative document sent to it on the clauses now proposed for the interim Bill. The T.U.C. has not yet pronounced upon it and I do not think that my hon. Frend ought to try to prejudge its response.

Mr. Roebuck: asked the Secretary of State for Employment and Productivity what representations she has received from the Confederation of British Industry about her proposals to make it a condition of employment that a worker should be granted the right to belong to a trade union; and what reply she has sent.

Mrs. Castle: This matter is among those on which consultations are taking place with the C.B.I. They have not made formal representatons to me on it.

Mr. Roebuck: Is my right hon. Friend aware that many firms positively discourage people from joining trade unions? Can she assure the House that she will not be deterred from introducing legislation to wipe out these and other


Tolpuddle practices by troglodyte employers which result only in wasteful disputes which are damaging to the national interest?

Mrs. Castle: I certainly assure my hon. Friend that I believe that the time is long overdue when we should have had on the Statute Book the right of every worker to belong to a trade union, and this will be one of the very important clauses of the interim Bill.

Mr. Edward M. Taylor: Will the right hon. Lady at the same time write into such a Bill the right of any individual not to join a trade union if he has deep-rooted or conscientious objections to doing so?

Mrs. Castle: Nothing in the Government's proposals impinges on this right.

Captain W. Elliot: asked the Secretary of State for Employment and Productivity what is the result so far of the conversations which the Government has held with the Trades Union Congress on the implementation of the White Paper, "In Place of Strife".

Mr. Kenneth Lewis: asked the Secretary of State for Employment and Productivity what further discussions she has had with the Trades Union Congress to consider industrial relations legislation.

Mr. William Hamilton: asked the Secretary of State for Employment and Productivity what progress has been made in her consultations which have been undertaken with the Trades Union Congress with a view to ensuring that the trade unions take effective steps to avert unofficial strike action, without recourse to legal sanctions.

Mr. Archer: asked the Secretary of State for Employment and Productivity what is the result to date of her consultations with the Trades Union Congress on the implementation of "In Place of Strife"; and if she will make a statement.

Mr. Winnick: asked the Secretary of State for Employment and Productivity if she will state the result of the discussions which the Government have had with the Trades Union Congress on the White Paper, "In Place of Strife".

Mrs. Castle: I would refer hon. Members to the reply given by my right hon. Friend the Prime Minister on 20th May to Questions from the hon. Member for Harrow, West (Mr. John Page), the hon. Member for Bromley (Mr. Hunt) and my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). Since then, my right hon. Friend and I have had a further meeting with the General Council to discuss revised proposals which are being put to the special Congress on 5th June. A meeting with the General Council is being arranged to take place after the special Congress.—[Vol. 784, c. 64.]

Captain Elliot: Is the Minister aware that I well appreciate the importance of carrying all the interested parties along with her if she can, but the Government's proposals were not enough. Will she therefore, without further delay, make up her mind and announce her intentions so that we on this side of the House can decide what further building is necessary on the foundations which she has laid?

Mrs. Castle: If the hon. and gallant Gentleman wants to put forward further proposals, alternative proposals, he and his hon. Friends had better consult the C.B.I., as Mr. John Davies has just denounced their alternative as being rather ineffectual.

Mr. Hamilton: Is my right hon. Friend aware that everyone on this side of the House would hope that voluntary agreement may be reached between the Government and the T.U.C. as to how this problem may be resolved without legislation? If in any case she is to introduce legislation, will she introduce a complete measure, with all the proposals in the White Paper rather than half of them, the half containing the most objectionable penal clauses?

Mrs. Castle: I am aware of my hon. Friend's preference for waiting for a comprehensive industrial relations Bill. But there are some matters which urgently need to be got on the Statute Book and I have already mentioned one. They are vital to an immediate improvement of industrial relations. The whole of the proposals in the White Paper are so far reaching and complex that it would take a long time to prepare legislation to get the whole on the Statute


Book. Therefore, we have certain proposals which will follow later.

Mr. Archer: Will my right hon. Friend bear in mind that many hon. Members on this side of the House are hoping anxiously that both parties to the negotiations will make serious efforts to reach an accommodation because, whatever differences exist within the Labour movement on industrial relations, they are much narrower than our mutual differences with the Conservative Party?

Mrs. Castle: I entirely agree with my hon. Friend. As he says, this is something which calls for efforts on both sides. I repeat that we think that the T.U.C. has made a marked advance, but there are still differences between us which are subject to continuing consultation.

Mr. Winnick: Is my right hon. Friend aware that all of us who have been firmly opposed to the so-called conciliation pause and fines obviously hope that agreement can be reached with the T.U.C. on the basis of its present programme? However, is she also aware—and I am choosing my words as carefully as I can—that if no agreement can be reached, those of us who honestly believe that we cannot vote for such measures cannot be blackmailed into doing so?

Mrs. Castle: As soon as we are in a position to do so, we shall make a full report to the House on the whole of the discussions and their outcome. It will then be for every hon. Member, in the light of the outcome of the discussions, to decide his reaction to it.

Mr. Dudley Smith: Will the right hon. Lady stop over-dramatising these proposals and their alleged scope? Is she aware that, while this is a useful advance, it is very limited and, as was said by my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot), it will be left to the next Government to implement proper industrial reform?

Mrs. Castle: I am well aware that the T.U.C. has taken very careful note of the sort of negative attitude to industrial relations taken by hon. Members opposite.

Mr. Orme: Will my right hon. Friend also take careful note of what has been

said by hon. Members opposite and not lay a base for the Conservatives to build upon? Does she not think that the T.U.C. has gone so far to meet her that it is up to her and her right hon. Friend now to go to meet the T.U.C., drop the penal clauses and get on with voluntary industrial relations?

Mrs. Castle: If my hon. Friend believes that the proposals which I have put to the House, in general terms so far of course, provide a base for Conservative policy to build on, he has not carefully studied either my proposals or those of the Opposition. I therefore say to him that it is tremendously important for all of us in this crucial matter to weigh our words carefully and to state the facts objectively.

Dr. Winstanley: On the question of urgency, is the right hon. Lady aware that my hon. and right hon. Friends on the Liberal bench would prefer to wait a little if that is necessary to get workable and enforceable proposals, rather than have unworkable and unenforceable proposals at an earlier date?

Mrs. Castle: I entirely agree that proposals put forward at any time should be workable and enforceable. We would not put forward any which we did not think would work.

Mr. R. Carr: Is the right hon. Lady aware that one of the main differences between her proposals and the proposals by the Opposition is that in the Opposition proposals sanctions against individuals play a very much smaller part than in her proposals? Is she further aware that the next Conservative Government will undoubtedly bring in a full-scale comprehensive measure on this subject?

Mrs. Castle: I would say that the implications for individual trade unionists of the Opposition proposals are very serious indeed. As to their workability, I refer the right hon. Gentleman to the article by Mr. John Davies of the C.B.I.

Prices and Incomes Policy

Mr. Biffen: asked the Secretary of State for Employment and Productivity when she proposes to introduce the order activating Part II of the Prices and Incomes Act, 1966; and if she will issue a White Paper guilding the National


Board for Prices and Incomes in the interpretation of the next stage of the statutory prices and incomes policy.

The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley): My right hon. Friend will be taking steps to re-activate Part II of the 1966 Act before the end of the year. A new White Paper also will be published during the course of the year.

Mr. Biffen: But is the hon. Gentleman aware that Part II includes Section 16, which contains the penal sanctions, and aganist which his hon. Friends below the Gangway have voted in the past and doubtless will vote again in future? In view of the failure of this policy, does it not seem that the scepticism of his hon. Friends was well founded?

Mr. Hattersley: As to the failure of the policy, if the hon. Gentleman will do the House the courtesy of reading the speech which my right hon. Friend made during the Budget debate, he will understand the number of false premises upon which his judgment is based. As to my hon. Friends below the Gangway, I am sure that they look upon the prices and incomes policy as one of the necessary factors in our continuing economic recovery. I am sure that many of them understand the necessity for its continuation.

Mr. Heffer: Since the Prime Minister said on television that other evening that he felt that his hon. Friends were possibly right on the question of east of Suez, when he was lagging behind a bit, would my hon. Friend not accept that perhaps many of us have been right about the prices and incomes policy? Is it not time to recognise that there is no need to pursue this policy any further?

Mr. Hattersley: I certainly do not draw that final conclusion. I am prepared to concede that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) was right on one of the occasions on which he has disagreed with the Government, but then, he has done it so often that it would be bound to happen at least once.

Mr. Higgins: Does the hon. Gentleman recall that, last September, his right hon. Friend told the Labour Party con-

ference that the Government's policy on prices was "nothing short of miraculous"? At the end of a month in which the index has risen a deplorable 1.4 points, are we to understand that the new White Paper will contain a norm roughly four times the present one?

Mr. Hattersley: There is a later Question about the new White Paper and I must wait to reply to that.

Mr. Hastings: asked the Secretary of State for Employment and Productivity whether she will now make a statement on the future of the prices and incomes policy after the end of 1969.

Mr. David Mitchell: asked the Secretary of State for Employment and Productivity when she expects to publish her proposed White Paper on Prices and Incomes Policy.

Mr. Ridley: asked the Secretary of State for Employment and Productivity when she expects to publish her White Paper giving guidelines for those fixing wages, prices, dividends and rents.

Mr. Hattersley: A new White Paper will be published later this year.

Mr. Hastings: Apart from the compulsory clauses already referred to, when it comes to this White Paper, will the hon. Gentleman assure us that he will reconsider the whole position of the Prices and Incomes Board? Will he not reflect that experience so far shows that it has been tackling symptoms rather than basic causes and that the whole existence of Mr. Jones and his Board probably aggravates wage discontent rather than the reverse?

Mr. Hattersley: The hon. Member's allegations are so wide and so lacking in substantiation that they are difficult to answer. If he considered many of the Reports of the Board, particularly those dealing with general subjects like productivity, I should have thought that he would see that it has made a spectacular contribution to the reorganisation of all sorts of industrial institutions. I am sure that Part II of the Act, continuing, as it will, next year, will need the Board to work in much the same way.

Mr. Moyle: Can my hon. Friend assure us that, in the new phase of the


prices and incomes policy, the Government will have adequate powers to control the possible raising by Conservative-controlled councils of council house rents?

Mr. Hattersley: I am conscious of the need, as is my right hon. Friend—as she said in the Budget debate—to keep this under review. The discussions about the future White Paper will certainly bear my hon. Friend's point in mind.

Mr. R. Carr: Does the hon. Gentleman's answer just now mean that, instead of an Order to activate Part II, we shall have new legislation?

Mr. Hattersley: It certainly does not mean that and I do not know how the right hon. Gentleman could have concluded that it did.

Mr. Manuel: He has a devious mind.

Mr. Higgins: asked the Secretary of State for Employment and Productivity why she has decided to reduce the statutory period over which she can delay increases in prices and incomes.

Mr. Speed: asked the Secretary of State for Employment and Productivity if she is now satisfied that the economic situation will allow a relaxation later this year of her statutory prices and incomes policy; and if she will make a statement.

Mr. Hattersley: I would refer the hon Members to the Budget Statement on 15th April and my right hon. Friend's speech in the debate on the Budget Resolutions on 16th April.—[Vol. 781, c. 1004–5 and c. 1176–9.]

Mr. Higgins: What improvement has there been in the economic indicators mentioned in the Budget Statement over the period when prices and incomes policy covered a longer period of restraint? What improvement has taken place which the hon. Gentleman feels justifies the policy?

Mr. Hattersley: Perhaps the first and most obvious is that referred to in the Answer by my hon. Friend to a previous Question, the 7 per cent. increase in production in manufacturing industries in the present year. This is clearly attributable to the emphasis my right hon. Friend has put on productivity arrangements.

Low Wages

Mr. Barnes: asked the Secretary of State for Employment and Productivity what plans she has to deal with the problem of low wages, in view of the conclusions of the Green Paper, "A National Minimum Wage".

Mrs. Castle: I am considering the problem of low wages in the light of the inter-departmental report on a national minimum wage, the information becoming available from the new earnings survey and the question of equal pay, since the great majority of low-paid workers are women.

Mr. Barnes: Since the Green Paper comes to the conclusion that a national minimum wage would be a less efficient way of relieving poverty than selective social benefits, is my right hon. Friend familiar with the contribution which negative income tax could make in this area?

Mrs. Castle: First, it is not really a Green Paper. It is an inter-departmental report by officials and it is put forward so that all of us who are interested in the problems of the low paid can have some of the essential information for considering this problem. There is a separate Question on the second part of the question.

Negative Income Tax

Mr. Barnes: asked the Secretary of State for Employment and Productivity if she will set up an inquiry to examine the effects on work incentives of the introduction of a system of negative income tax to replace family allowances.

Mr. Harold Walker: No, Sir.

Mr. Barnes: Since the Office of Economic Opportunity in the United States is running an experiment in negative income tax at the moment to test just this point, could my hon. Friend ask the United States Government to give him as much information as possible about the progress of this experiment?

Mr. Walker: That is a rather different question—

Mr. Barnes: No, it is the same question.

Mr. Walker: I have noted the persistence with which my hon. Friend has pursued this with the Chancellor and the Secretary of State for Social Services, and the replies which they have given. My hon. Friend asked for a separate study of the effect of negative income tax on incentives to work. This is not practical in the circumstances without the details of tax proposals and their relationship to other social benefits being taken into account.

Equal Pay

Mr. Norwood: asked the Secretary of State for Employment and Productivity if she will now introduce legislation to establish the principle of equal pay on the lines of the Bill introduced in 1954.

Mrs. Castle: The survey into the implications of equal pay for certain industries, which has been carried out by my Department in consultation with the T.U.C. and C.B.I., is now complete and a report on its findings is being prepared. I expect to receive it shortly when I shall be able to resume my discussions with both sides of industry on the timing of the implementation of equal pay and the form which legislation might take.

Mr. Norwood: Can my right hon. Friend assure the House that every ounce of speed will be used in bringing forward this legislation, as it is bound of its nature to be somewhat complicated?

Mrs. Castle: I can certainly give my hon. Friend an assurance that I shall now press ahead with discussions with the T.U.C. and the C.B.I. in the light of this report which has been drawn up on a survey carried out in consultations with both of them and which both of them feel to be an essential preliminary to our decision.

Large Companies (Procedure Agreements)

Mr. Hamlin: asked the Secretary of State for Employment and Productivity what response she has had to her invitation to certain companies employing more than 5,000 employees in individual establishments to register their procedure agreements with her department.

Mrs. Castle: These companies were invited, on 30th April to let my Depart-

ment have copies of their procedure agreements by the end of June. It is therefore too early to assess the response but I am glad to tell the House that we are receiving the full co-operation of the C.B.I. and the T.U.C.

Mr. Hamling: Would not my right hon. Friend agree that the positive proposals contained in the White Paper "In Place of Strife" would fit in very well with the sort of response that she is having, but would have a more significant effect on the whole of industry?

Mrs. Castle: I consider this examination of the procedure agreements, with which we are to press ahead as quickly as we can, to be an absolutely vital part of improving industrial relations. In the questionnaire which we have sent to employers we have tried to get from them information not merely about their procedure agreements, but about a wide range of procedural arrangements which affect consultation on the shop floor and the improvement of relations on the shop floor.

Wages Councils

Mr. Dance: asked the Secretary of State for Employment and Productivity whether she will now make a statement on the Government's proposals for wages councils; and what consultations have taken place on this subject.

Mr. Lomas: asked the Secretary of State for Employment and Productivity what consultation she has had about the wages council's proposals of the Royal Commission on Trade Unions; and if she will make a statement.

Mr. Harold Walker: Three separate meetings have been held with the chairmen and leaders of the workers' and employers' sides of wages councils. The T.U.C. and C.B.I. were associated with their respective sides and other employers' organisations in the retail distributive trades have been consulted. Arrangements are being made for further discussions with the T.U.C. and C.B.I. to take place shortly, after which I hope to be able to make a statement about the Government's proposals.

Mr. Dance: Does the Minister intend to amend the 1959 Act to exclude from the scope of wages councils undertakings


which have satisfactory arrangements for collective bargaining on their own, as recommended by the Donovan Commission and approved by the right hon. Lady in her White Paper?

Mr. Walker: As the White Paper makes clear, the recommendations of the Royal Commission relating to wages councils are subject to further consultation with the T.U.C., and C.B.I., and the interested bodies to which I have referred. We must await the outcome of those consultations before we decide what to do about those specific proposals.

Shop Stewards (Training)

Mr. Dodds-Parker: asked the Secretary of State for Employment and Productivity which industrial training boards make provision in their schemes for grants for the training of shop stewards.

Mr. Hattersley: Twenty do so already and others have the matter under consideration. I will, with permission, circulate the details in the OFFICIAL REPORT.

Mr. Dodds-Parker: In view of the importance of shop stewards in a modern industrial society, will the hon. Gentleman see whether successful schemes can be spread over a wider basis?

Mr. Hattersley: It is essentially an obligation on training boards to promote that sort of training. They have already been encouraged to do so by the circular sent out by the Central Training Council. The 20 boards have received copies of that circular.

Following is the information:

1. Industrial Training Boards which will grant aid the training of shop stewards: Agricultural, Horticultural and Forestry; Carpet; Ceramics, Glass and Mineral Products; Chemical and Allied Products; Civil Air Transport; Construction; Cotton and Allied Textiles; Engineering; Food, Drink and Tobacco; Furniture and Timber; Gas; Hotel and Catering; Iron and Steel; Knitting, Lace and Net; Man-Made Fibres; Paper and Paper Products; Petroleum; Shipbuilding; Water Supply; Wool, Jute and Flax.
2. The Electricity Supply Industrial Training Board operates a limited grant scheme, but actively recommends and encourages release on pay for selected courses agreed jointly with the unions.
3. Industrial Training Boards actively considering grant aid in this field: Distributive;

Footwear, Leather and Fur Skin; Printing and Publishing; Road Transport; Rubber and Plastic.

Professional and Executive Register

Mr. Dodds-Parker: asked the Secretary of State for Employment and Productivity whether she will set up an inquiry into the practice of charging employers for the services of the Professional and Executive Register.

Mr. Fernyhough: It is not the practice to charge employers for the services of the Professional and Executive Register, and we have no plans to change this arrangement.

Mr. Dodds-Parker: Might it not be a good thing to make some charge in the case of someone being successfully employed, and to give the board some money to spend on a rather wider service without it being to the detriment of public funds?

Mr. Fernyhough: It is refreshing to hear an hon. Member opposite asking us to put a burden on employers. We are always told that the burdens placed on them are far too heavy. I remind hon. Members opposite that under I.L.O. Convention 88 each member of the International Labour Organisation
shall maintain or ensure the maintenance of a free public employment service".
We would be running foul of that Convention if we made a charge.

Redundancy Payments Act

Mr. Donald Williams: asked the Secretary of State for Employment and Productivity when she expects to introduce legislation to amend the Redundancy Payments Act.

Mr. Hattersley: I am not at present able to say when legislation to amend the Redundancy Payments Act will be introduced.

Mr. Williams: I thank the hon. Gentleman for that Answer. May we hope that this matter will be looked into to clear up many of the anomalies which have arisen since the Act was brought into force, particularly that concerning a man or a woman who feels obliged to resign a position because of undue pressures brought to bear upon him or her?

Mr. Hattersley: I have said several times in this House that the Government accept that some anomalies exist. The object of the consultations now going on and of the proposed Bill is that these anomalies shall be rectified. The case to which the hon. Member referred would be more appropriately dealt with by our proposals for legislation on unfair dismissals, which are an important part of my right hon. Friend's White Paper.

Productivity Agreements

Mr. Higgins: asked the Secretary of State for Employment and Productivity in how many cases in which productivity agreements have been held to justify increases in wages and salaries in excess of the norms of the National Board for Prices and Incomes, increased payments have been made before productivity has increased; in how many cases additional payments have been made after productivity has increased; and what are the total figures for increases in incomes and productivity in these two circumstances.

Earl of Dalkeith: asked the Secretary of State for Employment and Productivity in how many pay settlements during the last 12 months increases in excess of the norm were approved on the grounds of increased future productivity; and in which of these cases the projected increase in productivity has been achieved.

Mr. Harold Walker: Since the present phase of the policy began in March, 1968, my Department has dealt with nearly 2,000 productivity cases of all kinds. Most were negotiated at the local level and, in general, productivity was expected to increase concurrently with pay. The average increase in pay under productivity deals at the national level was 4·2 per cent. In 10 cases the increases exceeded 3½ per cent. per annum and in two of these, part of the increases involved were based on past productivity. More detailed information would have to be specially extracted at a cost disproportionate to its value.

Mr. Higgins: Would not the Minister agree that the fact that many productivity payments have been made before productivity has increased, particularly in the nationalised industries, has been one of the main inflationary pressures in the economy and one of the main reasons

why the cost of living index has gone up by 1·4 points today?

Mr. Walker: I cannot accept the conclusion the hon. Gentleman draws. It is true that certain productivity deals are concluded before the benefits are seen, but we and the National Board are absolutely convinced, because of the changes involved, that the productivity increases will come. Certainly within the last 12 months there has been proof of that.

Mr. Scott-Hopkins: Has the attention of the hon. Gentleman been drawn to the road haulage industry where many small agreements have resulted in rises of over 30 per cent. without any comparable increase in productivity?

Mr. Walker: I have answered Questions on this subject in the past. We are looking at some of the agreements and our regional manpower and productivity people are examining carefully the effects of some of these agreements.

Mr. Ogden: Will my right hon. Friend consider referring managers' and directors' salaries to see if their productivity has increased before their salaries increased?

Mr. Walker: The National Board has a reference before it at present to look into salaries of that kind.

Mr. R. Carr: What evidence is there of increased productivity going hand in hand, for example, with increases granted to tally clerks?

Mr. Walker: If the right hon. Gentleman will take the opportunity to go to London Docks, as I do, he will see dramatic changes taking place in operations in the port and will be convinced that this is a bona fide productivity deal. There is not the slightest doubt that figures for the last 12 months prove that there has been a dramatic upsurge in productivity, for part of which we must give credit to the policy.

Confectionery and Toilet Preparations (Price Increases)

Mr. Molloy: asked the Secretary of State for Employment and Productivity if she is aware of the recent increases in prices of confectionery and toiletries; and


if she will now refer these prices to the National Board for Prices and Incomes.

Mr. Hattersley: The N.B.P.I. reported in July, 1968, on costs and prices in the chocolate and sugar confectionery industries, and I understand that price increases introduced since that report have been consistent with the Board's recommendations. Manufacturers' prices of toilet preparations were referred to the N.B.P.I. in December, 1968, and the Board's report is expected shortly.

Mr. Molloy: Is my hon. Friend aware that over the past six months there has been a persistent increase in prices of the items mentioned in my Question? Is he further aware that this is causing annoyance to ordinary housewives, who do not know when it will stop? Does he realise that they think, because of the prices and incomes policy, that someone is cheating somewhere? Will my right hon. Friend conduct an inquiry into the increases mentioned in the Question, and make a full statement as quickly as possible?

Mr. Hattersley: The facts to which my hon. Friend refers are four price increases in chocolates and sugar confectionery, all of which are consistent with the N.B.P.I. inquiry into the industry, and all of which stem basically from increases in the cost of raw materials. One of the price increases, I am sure my hon. Friend will be interested to know, was modified as a result of Government intervention.

Sir G. Nabarro: Is it not a fact that the principal constituents in the increased costs of these articles, toiletries and confectioneries, are the practices of the Chancellor, which have more than doubled purchase tax on certain toiletries and greatly increased purchase tax on all the articles referred to?

Mr. Hattersley: Certainly purchase tax and devaluation have had an effect. Those things were told frankly to the House in the prices policy and that is one of the reasons why we have run a prices policy which has been so much derided by the hon. Gentleman and his hon. Friends.

Strikes

Mr. J. H. Osborn: asked the Secretary of State for Employment and Productivity

how many people were on either official or unofficial strike, respectively, on 1st May.

Mr. William Hamilton: asked the Secretary of State for Employment and Productivity what was the estimated number of working days lost on 1st May due to unofficial strike action; and how many were lost as a consequence of that action.

Mr. Hattersley: Reports from my regional officers suggest that the total number on strike on 1st May was between 80,000 and 90,000 and that almost all of these were on unofficial strike.

Mr. Osborn: Can it be deduced from these figures that there is a large amount of unofficial support for the measures of the Minister within the trade union movement? Is this an indication of it?

Mr. Hattersley: It is unwise, and perhaps tempting fate, to deduce too much from those figures. Certainly the strike was nothing like as large as the proponents of it announced it would be before 1st May. It would have been even smaller had many of the men who were called out on strike by unofficial leaders understood what my right hon. Friend proposed in her White Paper, rather than being told about it by a number of unofficial publications which gave the wildest possible distortions of her proposals.

Mr. William Hamilton: Would my hon. Friend not agree that his figure conforms with the figures expressed in various public opinion polls showing that the hostility to the provisions of the White Paper is nothing like as severe or strong as the opposition of a certain vocal minority?

Mr. Hattersley: That conclusion is obvious, and I am happy to endorse my hon. Friend's judgment.

Mr. James Hamilton: Is my hon. Friend aware that when we have decent employers who will open the doors of communication with the trade unions, we will have no unofficial disputes? Is he prepared to get in touch with these employers to ensure that proper procedure agreements are reached? Is he aware that this is particularly necessary in the engineering industry where they are waiting for five weeks for local consultations? Is he aware that if he was prepared to do


something about this it would solve many of the unofficial stoppages?

Mr. Hattersley: No doubt my hon. Friend is right. That is the job for which the C.I.R. was established and it is the job that it will do as a first priority of the White Paper proposals.

Stoppages of Work

Mr. J. H. Osborn: askd the Secretary of State for Employment and Productivity how many working days per 1,000 employees have been lost to date this year due to official or unofficial stoppages; how this figure compares with that for the previous year over the same period: and how the average to date compares with the average of previous years.

Mr. Hattersley: Seventy eight working days were lost per 1,000 employees in the United Kingdom through official and unofficial stoppages of work due to industrial disputes in the period 1st January to 30th April, 1969. This figure compares with 43 for the corresponding period in 1968. During the previous 10 years the figure ranged from 13·21 in 1963 to 188·13 in 1962 giving an average of 52 for the whole period.

Mr. Osborn: Am I right in assuming that at present the rate of stoppages is among the highest in the history of this nation? Does this not justify the action of the Minister?

Mr. Hattersley: It depends upon what sort of average we take to describe the highest rate. I tried to say in my original Answer that this is about one-third of the 1962 rate.

Mr. Heffer: Is it not true that the whole question of unofficial strikes has been grossly exaggerated in this country? Is it not true that the highest level in the period under discussion was reached under the Conservative Government in 1962? Would my hon. Friend consider once again the views expressed by Professor H. A. Turner in his recent publication, which conclusively proved beyond doubt that we are being forced into an impossible and unsatisfactory situation?

Mr. Hattersley: Irrespective of various opinions as to the importance of the damage caused by unofficial strikes to the economy, I am sure the House agrees

that many unofficial strikes do irreparable damage both to the country and to other workers affected by them, put on short time or laid off. It is less important to make a precise quantification of the days lost than it is to make sure that my right hon. Friend has the opportunity to do what she can to bring unnecessary unofficial strikes to an end.

Oral Answers to Questions — EUROPE (FREE TRADE AREA)

Mr. Turton: asked the Prime Minister what progress he has made in his discussions with the leaders of the Common Market countries on the proposals of the former President of France for a free trade area in Europe.

The Prime Minister (Mr. Harold Wilson): Her Majesty's Government's position on General de Gaulle's ideas on this subject was made clear by my right hon. Friend the Foreign and Commonwealth Secretary in his statement to the House on 24th February and in his subsequent replies to Questions.—[Vol. 778, c. 1088–9, 1101–3.]

Mr. Turton: Is the right hon. Gentleman not aware that the expansion of the European Free Trade Area to include other countries in Europe, countries across the Atlantic and the more developed countries of the Commonwealth, would command far wider support among the British people than the proposals of Herr Strauss that Britain should be absorbed into a West European federation?

The Prime Minister: In this matter the former President of France did not envisage the extension to the N.A.F.T.A. countries that the right hon. Gentleman has in mind, and which he has previously raised in this House. It was an attempt to provide—as we always felt—a very inadequate substitute for our application to join the Common Market. I very much doubt in present circumstances whether we shall hear very much more of the proposals that President de Gaulle put forward on that occasion.

Sir G. de Freitas: Will my right hon. Friend continue to resist these attempts to divert this country into a flabby trading association, turning its back on the building-up of a really stronger and wider European community?

The Prime Minister: I agree with the objective which the right hon. Member for Thirsk and Malton (Mr. Turton) has in mind, and that is the widest possible area of freer trade within the world, or parts of the world which are prepared to trade. We believe that the best way to lead to that would be, first of all, to widen the economic community in Europe including Britain and the E.F.T.A. countries, and to use that as a bastion from which to challenge protectionist nations in other parts of the world.

Mr. Crouch: Is the Prime Minister prepared to say that with the same clarity of mind, the same sort of sentiments as were expressed early this week by Dr. Strauss when he spoke about a European community, not just a European Free Trade Area, when he spoke about the need for a meeting of nations in Europe, thinking as one, facing the problems of defence, foreign policy and trade as one?

The Prime Minister: Those parts of Herr Franz Joseph Strauss's statement, with which all of us would agree, have been expressed with equal clarity on a number of occasions by my right hon. Friend the Foreign and Commonwealth Secretary, not least when he talked about the need for greater political understanding in Europe, not only on European questions but on world problems. There is a European community. The trouble is that it is tempted to become too narrow and inward-looking because of the veto placed on its expansion, as provided for in the Treaty of Rome.

Mr. John Mendelson: Will my right hon. Friend make it clear that he is totally opposed to the main idea advanced by Herr Strauss, that of having a separate nuclear command within N.A.T.O. and with eventual German participation, with all the dangers incumbent upon such a development? Will he reaffirm his own statement in the last Common Market debate that the Government oppose all such plans?

The Prime Minister: We have always been opposed to this proposal. Practically every hon. Member of this House has always been, and always will be, opposed to such a proposal in the circumstances, in terms of a European nuclear group of this kind. As to co-operation in nuclear matters, this is a matter for

N.A.T.O. and the Government have taken useful initiatives here for European conventional defence, and with the Nuclear Planning Group. These are the right answers to this problem although I understand my hon. Friend's anxieties.

Sir R. Russell: Does not the Prime Minister agree that the trade associations we have with the Commonwealth and E.F.T.A. countries are not flabby as the right hon. Member for Kettering (Sir G. de Freitas) suggested, but are very active? Will he do his best to encourage them?

The Prime Minister: Yes, Sir. That has been one of the leading items in our discussions with the Commonwealth Prime Ministers, including the useful discussions at the conference earlier this year upon which I reported to the House. When my right hon. Friend the Member for Kettering (Sir G. de Freitas) used the word "flabby", he meant somewhat ill-thought-out and ill-digested proposals which are not likely to become reality for many years to come.

Mr. Jay: Will my right hon. Friend repeat the assurance he gave the House three weeks ago that it is not the policy of the Government to bring the United Kingdom into any sort of European federal State?

The Prime Minister: Yes, Sir. Not only I but many others said this in the debate in the House on the Common Market which led the House to express an opinion on that question. Whatever the long distant future may hold, this is not a reality and nor is it what we are asking for.

Oral Answers to Questions — SECRETARY OF STATE FOR EDUCATION AND SCIENCE (SPEECH)

Mr. Bruce-Gardyne: asked the Prime Minister whether the public speech of the Secretary of State for Education and Science on participation, in London, on 30th April represents the policy of Her Majesty's Government.

Mr. Christopher Price: asked the Prime Minister whether the public speech of the Secretary of State for Education and Science in London on 30th April about students represents the policy of Her Majesty's Government.

The Prime Minister: Yes, Sir.

Mr. Bruce-Gardyne: In that speech, the Secretary of State spoke of the Prime Minister's integrity, courage and humility—I think those were the words but perhaps the right hon. Gentleman will correct me if I have got them wrong. Since the Prime Minister's inspiration does not seem to have percolated very far into the country—

Mr. Faulds: Stupid little fellow!

Mr. Speaker: Order. I see that the hon. Member for Smethwick (Mr. Faulds) is back.

Mr. Bruce-Gardyne: —or even to the benches opposite, will the Prime Minister consider asking the Secretary of State to apostolise further on his behalf? If so, will the Prime Minister ensure that the right hon. Gentleman is equipped with specific instances of his courage?

The Prime Minister: The hon. Gentleman obviously wants to know whether this phrase is something that I could accept. The phrase he quoted was that it was an inspiration to my right hon. Friend, and I, with due humility, accept that it was a due inspiration to my right hon Friend, if not to the hon. Gentleman. The greater part of my right hon. Friend's speech referred to comprehensive schools. If the hon. Gentleman were to attend one of the comprehensive schools developed by my right hon. Friend, he might have the intelligence with which to understand the argument.

Mr. Price: The main part of the Secretary of State's speech was about participation. Is my right hon. Friend aware that the Secretary of State's remarks were very welcome and that they have done a great deal to stabilise the situation in the universities? Will he encourage his other Ministers to make speeches about participation on very much the same theme in relation to hospitals, planning procedures and, in particular, the introduction of some industrial democracy into this country?

The Prime Minister: My right hon. Friend's speech in part dealt with the question of the universities. He condemned the small minority who stop other students from studying. He stressed the importance of the comprehensive schools

in developing students who will be able to take a full part and participate in new ideas. I agree with my right hon. Friend that some students, with their remonstrations and other behaviour at a young age, are showing many of the destructive, negative and giggling characteristics of hon. Members oposite.

Oral Answers to Questions — CIVIL SERVANTS

Mr. Whitaker: asked the Prime Minister whether he is satisfied with the co-ordination between Ministers in establishing the number of civil servants required to implement recent legislation involving more than one Department; and if he will make a statement.

The Prime Minister: There are already arrangements which ensure that my right hon. Friends are fully aware of the manpower implications of any proposal under consideration by them.

Mr. Whitaker: Is it not correct that, while everyone desires maximum efficiency, any artificial limit on numbers results in civil servants working very long overtime which, for many of them, is unpaid? Since the Opposition frequently demand legislation as much as this side of the House which would require more civil servants, is my right hon. Friend aware that many civil servants who are my constituents and cannot answer for themselves are tired of being used as political footballs?

The Prime Minister: There is a problem, which has to be watched, of the danger of excessive overtime and it is true that, when a Government set out to create a ceiling on the number of civil servants, that danger is intensified. But I have been very carefully into the figures. Only a small minority do not receive overtime payment. I do not think that there is any cause for alarm at the moment. My hon. Friend will be glad to know that there was a fall of about 500 in the number of non-industrial civil servants between 1st April, 1968, and 1st April, 1969.

Rear-Admiral Morgan-Giles: Will the right hon. Gentleman tell us how many civil servants are involved in reconciling the conflicting policies of the British export drive on one side and the policy of sanctions against Rhodesia on the other?

The Prime Minister: About 15 per cent. of the number who would be require to reconcile Conservative promises to reduce expenditure and their pledges to spend more on almost every item.

Oral Answers to Questions — CABINET COMMITTEES

Mr. Bruce-Gardyne: asked the Prime Minister whether he will now answer Questions about arrangements for collective consideration of important matters in the Cabinet.

The Prime Minister: I would refer the hon. Member to my reply to a similar Question by him on 30th April, 1968.—[Vol. 763, c. 999–1001.]

Mr. Bruce-Gardyne: Surely the situation has changed since then. Since the Prime Minister has taken care to tell every newspaper that he has plucked up courage to snub the Home Secretary by excluding him from the inner Cabinet but does not have the courage to get rid of him altogether, should this House in all propriety not have the right to discuss the membership of the inner Cabinet?

The Prime Minister: The first two parts of the hon. Gentleman's supplementary question are based on a complete misstatement of the facts and therefore I do not need to refer to the third part. I suggest that the hon. Gentleman look up the Answer I gave him on 30th April, 1968, together with the reply to a supplementary question he put on that occasion. He will find that we have given more information about these matters, including, for example, the debate on the Fulton Report, than our predecessors—rather unlike the situation in 1956, when the Pretext Committee to find an excuse for invading Suez was not made public or even debated in the House.

Oral Answers to Questions — POPULATION GROWTH

Sir D. Renton: asked the Prime Minister if he will seek to establish permanent and adequate machinery for examining the difficulties to which population growth gives rise, for giving early warning to Parliament of such difficulties and for advising what steps should be

taken to overcome them well in advance of crisis point.

The Prime Minister: Growth in population and its consequences are already among the factors which existing Departments, particularly those concerned with social and environmental questions, take into account in their medium and long-term planning. In addition there are interdepartmental arrangements for the study of those longer-term aspects of the problem not immediately related to operational planning.

Sir D. Renton: I express my appreciation to the Prime Minister for his having come at least some way to meet the point of view expressed by more than half this House in the last Session. Is any study taking place of what the maximum or optimum population of the United Kingdom should be, bearing in mind that, if we are not to exceed that population, it will take many years of planning by voluntary means in order to achieve such a result?

The Prime Minister: The right hon. and learned Gentleman's case has been taken seriously by the Government not only in his interventions in the House but in the lengthy correspondence which he and I have had. We have strengthened the inter-departmental machinery co-ordinated by the Chief Scientific Adviser to the Government. It is too early yet to say whether it will be possible to give an answer to the question which the right hon. and learned Gentleman has raised. Obviously, it cannot be an easy question to answer. But a population bureau has been established in the Ministry of Overseas Development to deal with the world population question.

Mr. Alexander W. Lyon: In assessing the effects of population change, is it not necessary to give wider publicity to the figures which the Home Secretary announced recently, indicating that there had been a 10 per cent. drop in the immigration of dependants from the Commonwealth last year, with a 20 per cent. drop in the first four months of this year?

The Prime Minister: Those are important figures announced by my right hon. Friend. The House will, of course, remember that my right hon. Friend had to ask Parliament for special powers 15


months ago to ensure the control of abuses in the matter of immigration.

Mr. David Steel: Will the right hon. Gentleman try to co-ordinate the policies of the Minister of Overseas Development and the Secretary of State for Scotland in this matter of population growth? Is he aware that the Minister of Overseas Development has just made a welcome increase in the grant to the International Planned Parenthood Federation, while the Secretary of State for Scotland has refused to allow local authorities to implement the Public Health Act and provide local authority family planning clinics?

The Prime Minister: I do not think that there is a contradiction or inconsistency such as that which the hon. Gentleman has in mind in this case. I believe that most people in this country are aware of the facilities. This has been a matter of great public controversy among what is a totally literate population who know all the issues. The grant for developing countries given by my right hon. Friend is, of course, directed at people who do not know the issues or the means of keeping their populations within control.

Mrs. Renée Short: Would my right hon. Friend venture to have a word with his right hon. Friend the Secretary of State for Social Services about this matter and ensure, first of all, that he sees that local authorities are carrying out their responsibilities under the Family Planning Act? Is he aware that, far from what he said, very many people in this country do not yet know that these facilities are available, and that many authorities are not providing them?

The Prime Minister: I would be charmed to have a word with my hon. Friend on this or on any other subject. I am sure that my hon. Friend, who I know has studied this matter in a number of areas where difficulty has been experienced, would be fitter than I to have a discussion with my right hon. Friend.

NORTHERN IRELAND (DISCUSSIONS)

The following Questions stood upon the Order Paper:

Mr. FISHER: To ask the Prime Minister whether he will make a statement arising from his meeting with the Prime Minister of Northern Ireland.

Mr. MCNAMARA: To ask the Prime Minister whether he will make a statement concerning his discussions with the Prime Minister of Northern Ireland.

The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Questions Nos. Q9 and Q13 together.
In view of the interest of the House in the discussions, I felt that I should reply at some length to these Questions.
My right hon. Friend the Home Secretary, the noble Lord the Minister of State, Home Office, and I had a useful exchange of views with Major Chichester-Clark and his colleagues on matters of common concern, including the momentum of social reform in Northern Ireland, security and public order, and the prospects and plans for the Northern Ireland economy.
On social reform, we were glad to hear from Major Chichester-Clark that the Northern Ireland Government intend to introduce, at the earliest possible moment, legislation to provide that the next local government elections shall be held on the basis of universal adult suffrage and without any element of multiple voting. The Northern Ireland Government are proposing to defer the local government elections which would otherwise be due in May, 1970, until October, 1971, by which time a reorganised pattern of local government for Northern Ireland will have been established.
The Northern Ireland Government aim to publish this autumn a White Paper making detailed proposals for the perimeter boundaries, functions and finance of the substantially reduced number of new local authorities. The Northern Ireland Ministers affirmed their intention to ensure that the important task of designating electoral areas within these new authorities will be carried out in a way which will be clearly seen to be fair and impartial.
We were also told that the Northern Ireland Government hope to issue to their local authorities during the summer a model points scheme for allocation of houses. While it would be impracticable to oblige local authorities to adopt a particular scheme, all authorities will be expected to submit for approval a scheme of demonstrable fairness which can be published and made available to potential applicants.
On procedures for remedying grievances, as the House already knows, Sir Edmund Compton will be taking up his duties as Parliamentary Commissioner for Administration for Northern Ireland as soon as the relevant Bill receives the Royal Assent. Northern Ireland Ministers also propose to introduce in the present Session of their Parliament a Bill to establish machinery to consider citizens' grievances against public authorities other than central Government Departments. This machinery will deal with grievances arising from the operation of local authorities.
We discussed the Special Powers Acts and the particular question of the derogation to the European Human Rights Convention which has to be entered because of certain regulations made under those Acts. Northern Ireland Ministers appreciate our desire that this source of embarrassment should be removed as soon as possible, but, clearly, this will require, first, a period of calm.
I expressed to Northern Ireland Ministers our desire that the commitment of troops for guard duties at vital installations in Northern Ireland should be discontinued as soon as possible, but accepted that they must remain for the time being. The Northern Ireland Ministers outlined to us their plans for increasing recruitment to the Royal Ulster Constabulary, which we are agreed was desirable.
Finally, we had a lengthy discussion about employment prospects and industrial development in Northern Ireland.

Mr. Fisher: While completely supporting the policies of toleration, moderation and reform so courageously pursued by Captain Terence O'Neill, and the very good start that has been made by the new Prime Minister, may I ask the right hon. Gentleman to agree that it would

be wise not to press Major Chichester-Clark to go faster than majority public opinion in the Province will support, since to do so might be counterproductive and perhaps even dangerous?

The Prime Minister: This is always a problem with which one must deal in this type of situation, because there were, of course, very many years when these problems were not dealt with urgently enough. We all recognise the great courage of Captain O'Neill in pressing on with these matters, which we discussed with him, and, indeed, the price he paid for so doing.
I was reasonably satisfied yesterday, on hearing the plans of the new Government, that what Captain O'Neill fought for will now become a reality, and within the urgent time-scale which all of us regard as being necessary.

Mr. McNamara: Is my right hon. Friend aware that he and my right hon. Friend the Home Secretary deserve the congratulations of all hon. Members and of all the people of Northern Ireland for the very strong stand that they took in recognising these problems—in recognising them even before many hon. Gentlemen opposite were prepared to admit that they existed?
Will he confirm, while we welcome all the advances that have been made, that there is still a reasonable amount of suspicion, which is understandable, because of the delay announced by my right hon. Friend in the holding of local elections in Northern Ireland and in announcing the abolition of the invidious Special Powers Act?

The Prime Minister: There will always be a certain degree of suspicion and unease because of the many years, even decades, when these matters were not tackled. The report which my right hon. Friend and I heard yesterday enables us to justify to the House the statement that progress is now being made; and in the matters I listed in my statement the House will have noticed that a considerable number of them are matters for legislation within the present Session. The Ombudsman Bill has, I understand, already gone through the Commons in Northern Ireland and is now in the Senate.
I do not think that there is justification—I have thought a lot about this—for


suspicion about the postponement of next year's local elections. The existing local government system of Northern Ireland is quite indefensible. If we were to have elections next year, even with the present boundaries of the constituencies, the ward boundaries would be indefensible.
I think that the Northern Ireland Government are, therefore, right in streamlining the number of constituencies into a much smaller number, in announcing their plans in a White Paper this autumn, in scrapping next year's local elections, and then getting the ward boundaries based on a system which will be seen by everyone in Northern Ireland to be fair and impartial.

Mr. Lubbock: While welcoming the firm commitment to the changes announced by the right hon. Gentleman, may I ask him whether he is satisfied—I appreciate that he has more or less answered this question—that it is necessary to defer the local elections for a year, considering that the necessary legislation to alter the ward boundaries and reform the electoral system could take place in the next Session of the Northern Ireland Parliament and still be in time for elections in October, 1970? Is he aware that an immense contribution to the creation of a peaceful atmosphere in Northern Ireland would be the immediate rescinding of the Special Powers Act?

The Prime Minister: I really answered the first part of the hon. Gentleman's supplementary question earlier. I believe that what is proposed is right. It would no doubt be possible to rush the local government elections in that way on the new boundaries, but there has been so much suspicion—indeed, so much justified suspicion—in the past about the local ward boundaries and the rest that I think it right that time should be given for the creation of fair and impartial machinery to give everybody confidence that when the local government boundaries and local government units are set up, they will properly represent the views of the people of Northern Ireland.
The second part of the hon. Gentleman's supplementary question is a point which we pressed strongly on Capt. O'Neill; the embarrassment which the

Special Powers Act represents for the Government of the United Kingdom of Great Britain and Northern Ireland. They were urgently considering a move to meet us on this point. They were very willing to do it, but in the very week when progress could have been made we got the disastrous explosions which cut off the water to Belfast, and so on. In the circumstances, nobody could blame them for not proceeding further.
They now feel, and I agree, that there must be a period of quiet and a restoration of confidence in the security of these installations—security against events of this kind—and then I think that they will be ready to move as quickly as we would want to press them to get rid of the Special Powers Act.

Mr. Fitt: While expressing my deep gratitude to my right hon. Friend for the great interest and concern which he has shown for the battle for civil rights and social justice which has been raging in Northern Ireland recently, may I ask him whether he is aware that in the recent formation of the new Northern Ireland Government there was an intake of extreme right-wing people who may attempt to prevent the new Prime Minister of Northern Ireland from implementing reforms? Would my right hon. Friend assure the House that he will keep a watchful eye on that type of person?

The Prime Minister: The representatives of the Northern Ireland Government who visited Downing Street yesterday and discussed these matters with my right hon. Friend and myself were fully representative of the new Government. I saw no reason to doubt that what the Prime Minister of Northern Ireland told me fully represented the views of the Cabinet which he leads. Mr. Faulkner was there, Mr. Andrews was there, Mr. Porter was there, and I felt that they were speaking as one in accepting not only the need for reform but the timing which Major Chichester-Clark proposes.
We shall remain watchful; that is necessary in this situation. The best way to ensure that there will be the rapid progress made which the whole House desires to see made is for Northern Ireland to have a period of calm and quiet—and I am referring to extremists of one point of view and the Paisleyites who


have been demonstrating in Edinburgh. I believe that there is at long last a desire and possibility in Stormont to do the job which must be done.

Mr. Heath: As the Northern Ireland Government are now carrying through the reforms which we have supported under both Captain O'Neill and the present Prime Minister, and as the right hon. Gentleman himself has stated that he is reasonably satisfied with what is being done, will the right hon. Gentleman state unreservedly and clearly that much the best thing for Northern Ireland now is that the Northern Ireland Government should be given a full opportunity to carry through these reforms? Will he state clearly, which he has not yet done, that progress should be unimpeded by extremists from any quarter at all?

The Prime Minister: If the right hon. Gentleman had been a little less busy preparing that question—it is a good, fair question—he would have heard me answer it before he got up to put it.
I said that what Northern Ireland needed now was a period of calm and quiet. I deplored any interference with that calm and quiet, whether from extremists, on the one hand, or Paisleyites, on the other. I said that we want freedom from that, because I am convinced that the Northern Ireland Parliament realises not only what needs to be done and the time scale, but the urgency with which it needs to be done.
I repeat that, and make clear that Her Majesty's Government have not only deplored violence from any quarter or provocation from any quarter; we agreed, at the request of the Northern Ireland Government, to the provision of troops to safeguard installations against violence.

Mr. Heath: I am grateful to the Prime Minister for making it absolutely plain that this applies to the extremists behind him just as much as it does to extremists elsewhere.

Mr. McNamara: On a point of order. Is it in order for the Leader of the Opposition to say that there are extremists sitting behind my right hon. Friend who favour the use of violence in obtaining civil rights for the citizens of Northern Ireland?

Mr. Speaker: The Leader of the Opposition did not say all that the hon. Gentleman says he said. It is not out of order for the right hon. Gentleman to say that there are extremists in some parts of the House.

The Prime Minister: I am sorry that the right hon. Gentleman the Leader of the Oposition imported that note into a series of exchanges in which the whole House was, quite rightly, feeling some satisfaction with the report which we had yesterday and with the part which all parties in this House had played in pressing the Northern Ireland Government to take this action. I very much regret that he should have used that phrase, even if it was in order. We have consistently deplored violence, whether or not it has come from across the border, for whatever purpose. The question of the border is not and has not been at issue in those discussions. I have made our position very clear on that. If we are to talk about extremists sitting behind any right hon. Gentleman—

Sir Knox Cunningham: Say it!

The Prime Minister: —I must remind the right hon. Gentleman that my hon. Friends and many hon. Members on his own side of the House are showing very great patience about the need for reform, considering that responsibility lies so heavily on those who had responsibility in Northern Ireland for 50 years.

Miss Devlin: While congratulating the Prime Minister on his useful discussion, may I ask him whether any steps have been taken by the Prime Minister or by the national Government at Westminster to ensure that such useful discussion is, in the time stated, translated into useful action which will be beneficial to the people of Northern Ireland, which to me is more important than removing the embarrassment of the British Government in the European community?
Since the reason for maintaining the Special Powers Act at the moment rests on the various explosions in Northern Ireland, does he not feel that such special powers might also be translated into effect in the Parliament of England, Scotland and Wales lest someone should happen to blow up something here? I


believe that if, as the Prime Minister appears to convey, common law cannot deal with such practices in Northern Ireland, it cannot deal with them here either.

The Prime Minister: I am sure that the hon. Lady will use her very great influence on people who might be tempted to think in those terms not to develop such tendencies on this side of the Irish Channel.
On the main part of her supplementary question, concerning the Special Powers Act, she will be aware that in previous reports to the House about discussions with Captain O'Neill it was made clear that this was one of five issues which we discussed with him. My report this afternoon shows that there is not only full awareness of but determination to deal with four of those five issues quickly and by legislation in the Stormont Parliament.
As I said earlier, no doubt within the hearing of the hon. Lady, I believe that there would have been a ready and speedy response to our proposals concerning the Special Powers Act in April and that they would have been considered by Captain O'Neill's Government but for the devastating explosions and the damage which they did to thousands of citizens who had their water and other essential services cut off. In those circumstances, not a Government in the world would have gone on with what was proposed concerning special powers until they were assured that there would be a period of law, order, peace, calm and quiet.

Sir Knox Cunningham: Does not the Prime Minister think that in the matter of extending the usefulness of the Ombudsman by other methods he might do well to follow the lead given by Ulster?

The Prime Minister: I am grateful to the hon. Gentleman for supporting the reforms that we have pressed on Captain O'Neill, because he was the only Ulster Unionist Member of Parliament not to sign the Motion on the Order Paper last December. He could have provided a valuable lead there, because of his well-known influence with certain quarters who badly need a lead in Northern Ireland.

Sir Knox Cunningham: What quarters?

The Prime Minister: Quarters that listen to the hon. Gentleman—and that should be enough to condemn them.
In reply to the hon. Member's question about the Ombudsman—and this at least was a serious point—we had to press the Stormont Parliament to apply, for the actions of the Stormont Government, the same procedures as we have in this House for the actions of the Government of the United Kingdom as a whole.

Sir Knox Cunningham: Will you follow the lead?

The Prime Minister: They are following our lead, yes.

Sir Knox Cunningham: Sir Knox Cunningham rose—

Mr. Speaker: Order. The hon. Gentleman must control himself.

The Prime Minister: On this matter they are following our lead and applying the procedures to the Stormont Parliament.
What I have announced this afternoon, which does not come under the heading of Ombudsman—perhaps that is what the hon. Gentleman had in mind—is that I was told yesterday that they are proposing to introduce legislation which will enable them, outside the Government, to deal with complaints against other public Departments and local authorities, and to provide machinery for the examination of grievances.
When that Bill is through, they will be ahead of this House and of the hon. Gentleman. I have on a number of occasions said that we are studying the question, but, of course, local authorities in Britain, be they Conservative or Labour controlled, are very different from many local authorities in Northern Ireland.

Mr. Heffer: Will not my right hon. Friend agree that his acceptance of the wide principle of calm in this situation should not be interpreted to mean that we will not continue to put proper Parliamentary and governmental pressure on the Northern Ireland Government to oppose the bigots who will do everything possible to stop one man, one vote, in Northern Ireland?

The Prime Minister: The hon. Gentleman is really putting the point that was put by the Leader of the Opposition, and I entirely agree with my hon. Friend on


this matter. What we are appealing for—and I was glad that he emphasised his support for this—is an attempt to stop the feeling that reforms are more likely to be achieved by rioting in the streets or blowing up installations than by getting decisions in the Stormont Parliament, which is the legitimate place for them.
We shall, of course, in this House, all of us, all parties, the Government and hon. Members, press the Stormont Government to get on with these Measures. After yesterday's report, I am satisfied that they are determined to do so.

Mr. Stratton Mills: Is the right hon. Gentleman aware that his recognition of the need for the retention of the Special Powers Act in the present circumstances, and his condemnation of violence from whichever quarter, are greatly to be welcomed? Will he pay tribute to the Stormont Government for going forward with these reforms?

The Prime Minister: I have done so, now and on previous occasions. There was some doubt, following the fall of Captain O'Neill whether they would press on. I am now fully satisfied that everything for which he is working will be carried through on a reasonable time scale.
I have already stated the position on violence and the Special Powers Act. I felt that it was not unreasonable that they should postpone their ideas of abolition when these explosions occurred, but that does not mean that the Special Powers Act should continue for an indefinite period. There must be a period of calm, quiet and orderly behaviour before that action can be taken. We shall be pressing them at the right time to do it if they are not already doing it.

DR. A. E. LAURENCE

The following Questions stood upon the Order Paper:

Mr. DOUGHTY: To ask the Secretary of State for the Home Department whether police inquiries into the case of Dr. A. E. Laurence have now been completed; and whether he will make a statement.

MR. LIPTON: To ask the Secretary of State for the Home Department whether he will now make a statement on the case of Dr. A. E. Laurence.

Mr. Speaker: Mr. Callaghan.

Mr. Lipton: On a point of order. During the course of the Rulings you gave yesterday, Mr. Speaker, you pointed out that if a Minister proposed to answer out of turn a question on the Order Paper he should let the hon. Member concerned know. A further Ruling which you gave yesterday was that you could not deal with a charge that a Minister had stimulated an hon. Member to put down a Question. That, you said, was a matter of esoterics and philosophy, and not of order for Mr. Speaker.
I mention that Ruling to draw attention to the fact that, although the Home Secretary has for many weeks past known that I was interested in Dr. Laurence, and although I have made frequent approaches to the Home Office to find out when, if at all, he intended to make a statement to the House, not until 12.30 p.m. today did I receive a telephone message from the Home Office asking me to telephone the Home Office.
Not until I learnt that the Home Secretary had asked the hon. and learned Member for Surrey, East (Mr. Doughty) to put down a Question for today did I begin to suspect the possibility that the Home Secretary intended to make a statement at the end of Question Time today.
In the interests of backbenchers, I think that it should be established that Ministers should treat backbenchers with the elementary courtesy to which they are entitled. It is deplorable that, although the Home Secretary has known for many weeks past that I was interested in this matter, it was not until 12.30 p.m. today that a member of his staff took the trouble to telephone to the House of Commons to ask me to telephone the Home Office.
I suspect, as I was asked to telephone the Home Office, that the B.B.C. was asked to include in its one o'clock news bulletin a statement to the effect that the Home Secretary would answer orally today the Question on the Order Paper about Dr. Laurence.
I wish to register my protest against the way in which the Home Secretary has


behaved, and to ask you, Mr. Speaker, to say that such conduct is not in accordance with the spirit of the Ruling which you gave to the House yesterday.

Mr. Doughty: Further to that point of order. The Question concerns me, my constituency and my constituent. I have been treated with full courtesy by the Home Secretary, who has given me ample notice of his intention so to act today. It is the hon. Member for Brixton (Mr. Lipton) who is acting contrary to the customs and usages of the House in attempting to deal with a matter that solely concerns another hon. Member and another hon. Member's constituency.

Mr. Speaker: Order. I should have thought that the hon. Member for Brixton (Mr. Lipton) would be anxious to hear the answer to the Question which he has been pressing for some time. He complains of lack of courtesy. I understand from his statement that he was informed at 12.30 p.m. today that his Question would be answered. I cannot begin to rule on what is the appropriate amount of notice that should be given. From what the hon. Gentleman has said, I understand that the Home Secretary has given him notice.
The question whether a Minister should inspire an hon. Member to put down a Question which the Minister wishes to answer is a matter for the Minister. In view of what the hon. and learned Member for Surrey, East (Mr. Doughty) has just said, it seems that this case concerns a constituent of the hon. Member.
On the last issue, it is a broad rule that an hon. Member does not take up the case of another hon. Member's constituent. This is a most beneficial rule and custom hon. Members usually observe. There may, however, be occasions, if an hon. Member thinks that a great issue of principle is involved, when he takes up a case in another hon. Member's constituency. I hope that we can now get on to the answer.

Mr. Lipton: Thank you, Mr. Speaker, for your remarks.
I would like to make clear that the solicitor acting for Dr. Laurence specifically requested me, in writing, to deal with this case, for many reasons, which it would be embarrassing to the hon. and learned Member for Surrey, East to

disclose, although I may disclose them on a future occasion. I put down the Question at the specific request of the solicitor acting for Dr. Laurence, who knew very well what were the ordinary conventions of the House, but who felt that national questions were involved in this and that it was not merely a local incident in Surrey.

Mr. Speaker: We must leave the matter there and get on to the Question, which is of some importance.

The Secretary of State for the Home Department (Mr. James Callaghan): I will, with permission, Mr. Speaker, now answer Questions Nos. 67 and 68 together, having tried to behave with courtesy to all hon. Members who have shown an interest in this particular subject.
Yes, Sir. In April, information was received from a K.G.B. agent who had defected to the West that Dr. Laurence had been recruited in 1963 to work for the K.G.B.
A number of interviews have taken place with Dr. Laurence, and the assessment of the case is now complete.
My right hon. and learned Friend the Attorney-General has come to the conclusion that on the available information there are no grounds for taking proceedings against Dr. Laurence under the Official Secrets Acts.

Mr. Doughty: I am sure that my constituent, Dr. Laurence, will be very pleased to hear that no proceedings are contemplated against him. On his behalf, may I thank the Home Secretary for that information?
May I ask the Home Secretary whether the incidents which took place in my constituency, in Higher Drive, Purley, took place with his knowledge and consent at the time that they occurred?
Finally, if any further information comes to light, or if any further action is proposed, will the Home Secretary get in touch with me as the Member for that constituency?

Mr. Callaghan: Perhaps I might be forgiven for not commenting on the last part of that question, but I can assure the hon. Gentleman that I will try to show courtesy to all hon. Members who are interested in this matter.
On the other part of the question, the police and security services have acted throughout in accordance with the law. They have taken no steps that they should not have taken. I was aware of the steps which were proposed to be taken. As for the great Press publicity surrounding the occasion, it is one of the burdens which we must bear with fortitude because we have a free Press. I have satisfied myself that it would have been improper for the police on the occasion concerned to have left the house unattended.

Mr. Lipton: May I, with your permission, Mr. Speaker, ask two questions of the Home Secretary? Why did the issue of the search warrant on 12th April become public knowledge within a very short time after it was issued—and we all know that search warrants are always issued in closed court—a week before Dr. Laurence returned to the United Kingdom from a holiday in Minorca?
Does the right hon. Gentleman think that whoever was responsible for mount-in this operation acted with efficiency and dispatch, in the absence of which this kind of thing becomes a messy flop? Why is it that so long after Dr. Laurence himself was informed by the police on 19th April and again on 7th May that he was in the clear it has taken the Home Secretary all this time to make a statement to the House that no proceedings will be taken against the man in question?

Mr. Callaghan: I do not know in what circumstances the information about the warrant became public. I cannot give an answer on that, although I am afraid that there are normally a large number of channels through which information becomes known, and perhaps it would be better if it were not known. But this, in my view, is not the major question. The major issue is that the warrant was secured and was executed properly and legally.
As to whether or not this is a "messy flop", Dr. Laurence was never given a clearance by the police. Whatever statements may have been made in that connection are incorrect. The assessment of this case was not completed until yesterday, when I had seen all the papers and had finally concluded the examination.
Dr. Laurence could have avoided a great deal of this embarrassment if, when he had first been approached—or, indeed, at any time during numerous approaches made to him—by the K.G.B., he had even indicated to our security services that those approaches were being made. There need then have been no embarrassment of any search warrant or search.

Sir D. Renton: Is the right hon. Gentleman aware that although there are rare occasions when, for reasons of national security, private premises have to be entered and searched, it is a decision which should not be taken lightly or without due process of law? We therefore welcome his assurances that his own responsibility was engaged in this matter and that the police obtained the search warrants which were necessary.

Mr. Callaghan: I am obliged for what the right hon. Gentleman has said. The police obtained the search warrants after I had been consulted on the matter. I knew what they were proposing to do. Dr. Laurence was alleged by a defector to be a Russian agent. That was the allegation made. It would have been quite improper for the security services or police to have taken less than the action they did in pursuance of their duty to protect the State. I am satisfied that, on the basis of the original information which was received, the source from which it had arisen, and the circumstances surrounding it, they were correct to take the action they took, both initially and subsequently.

BUSINESS OF THE HOUSE

Mr. Maudling: May I ask the Leader of the House whether he will state the business of the House for the week after the Recess?

The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Yes, Sir. The business for the week after the Recess will be as follows:
MONDAY, 9TH JUNE—Remaining stages of the Children and Young Persons Bill.
TUESDAY, 10TH JUNE—Remaining stages of the Education (Scotland) Bill and of the Overseas Resources Development Bill.
Lords Amendments to the Agriculture (Spring Traps) Bill and to the Vehicles and Driving Licences Bill.
WEDNESDAY, 11TH JUNE—Second Reading of the Tanzania Bill [Lords].
Remaining stages of the Town and Country Planning (Scotland) Bill.
Motion on the Television Act, 1964 (Additional Payments) Order.
THURSDAY, 12TH JUNE—Supply [20th Allotted Day]:
Debate on a Motion to take note of the Sixth Report from the Estimates Committee, 1967–68, relating to Promotion of Exports, and the consequential Departmental Observations.
Afterwards, it is intended to provide an opportunity for the House to take decisions on the Divorce Reform Bill.
FRIDAY, 13TH JUNE—Private Members Bills.

Mr. Maudling: Could the Leader of the House say, first, whether the Industrial Relations Bill and the Pensions Bill will be published during the week after the Recess and, if not, when will they be published?
Secondly, the Leader of the House is aware of the difficulty over publications which is causing considerable inconvenience to hon. Members. I know that the Chief Secretary made a statement on this matter, but could the right hon. Gentleman assure the House that he is doing everything possible to get over this difficulty?

Mr. Peart: Yes, on the second question, I can give the assurance. Indeed, I was pressed by the right hon. Gentleman's right hon. Friend earlier on this matter. I was asked that even though documents are not available in printed form they should appear in an alternative form. I give that assurance.
I cannot say specifically when the Industrial Relations Bill will be published. I hope that the National Insurance Up-rating Bill will appear soon after the Recess.

Mr. James Johnson: Could the Home Secretary tell us whether there is any possibility of the Merchant Shipping Bill being introduced later this Session?

Mr. Peart: This is not among the business which we shall have when we return from the Whitsun Recess. I have on previous occasions repeated that we intend to publish the Bill this Session.

Sir L. Heald: May I ask the right hon. Gentleman a question about the Divorce Reform Bill? Since it would not be in order for the House to consider the Bill on 12th June unless it is Government business, would the Leader of the House confirm that the Government have now abandoned their pretence of neutrality towards the Bill?

Mr. Peart: No, the Government have not. It was felt that, in view of the interest in this matter by hon. Members on both sides, the House should come to a decision.

Mr. Hector Hughes: Will the Leader of the House find time at an early date for consideration of my Motion No. 312?
[That this House congratulates British Railways, its officials and workers on their difficult and expert tasks of avoiding accidents when running trains on lines at present outmoded for the high speeds expected today; and expresses the view that those high speeds are not worth the risks to life, limb and property involved and that therefore, until the trains and railway lines are improved by modern science, they should travel at speeds commensurate with safety to be determined by experts in a scientific and humane manner.]
This deals with the out-of-date condition of many of our railway lines having regard to the high speed of trains in these days? This matter is particularly urgent bearing in mind the number of accidents as a result of high speeds on the railways.

Mr. Peart: I am well aware of my hon. and learned Friend's Motion. But I cannot find time when we return for this Motion to be debated. It is a matter for the railway authorities.

Mr. Marten: Has the Leader of the House seen Motions Nos. 298 and 306 urging the Government to make studies of the economic effect of entering the Common Market? May we have a debate on this important issue when we come


back after Whitsun, in view of the developments now in Europe?
[That this House urges the Government to publish up-to-date studies showing the economic effects on Great Britain of joining the Common Market.]
[That this House calls upon Her Majesty's Government to publish up-to-date estimates similar to those contained in Command Paper No. 3274 of the economic consequences for the United Kingdom of joining the European Economic Community.]

Mr. Peart: I am aware of the anxiety of many hon. Members, even those who may not have signed the Motions. I will note the hon. Gentleman's question carefully, but I cannot promise a specific debate on the Motions.

Mr. Ogden: My right hon. Friend will be aware that my right hon. Friend the Secretary of State for Economic Affairs promised a statement early after Whitsun on the areas in the North-West which are to receive special assistance following the Report of the Hunt Committee. May we have an assurance that my right hon. Friend will try to find time shortly after Whitsun for a debate on this important matter?

Mr. Peart: Yes. I replied to a question last week on this matter. In view of the week's business that I have just announced, I cannot be specific, but I note my hon. Friend's views.

Mr. R. Carr: In view of the disappointing fact that the Leader of the House still cannot give us a date for the publication of the Industrial Relations Bill, can he give us at least an assurance today that the delay in the publication of the Bill will not be made good by pressurising the House unduly over the time allowed for us to consider it, both before and during our debates on it?

Mr. Peart: I am sure that opportunities will be made available for adequate discussion when the Bill is produced.

Mr. Raphael Tuck: May I draw my right hon. Friend's attention once more to the impending closure of S. G. Brown, at Watford? I appreciate that there was a short Adjournment debate earlier this week, but the presence of many hon.

Members showed the considerable interest which has been engendered.
In view of the fact that the nation is about to lose the highly technical skills which have been built up there over the years, will my right hon. Friend consider a short debate in the near future, though not perhaps next week?

Mr. Peart: Quite rightly, my hon. Friend pressed me on this last week, when I said that the Ministers concerned were examining it and making inquiries. I confess that I had not yet read my hon. Friend's speech on the matter, but I will put his views to the Ministers concerned and stress its importance. I cannot promise a debate during the week that we return, but I will bear my hon. Friend's point in mind.

Sir G. Nabarro: Can the Leader of the House give us an assurance that, during the week that we return, he will be paying attention to the three vacant Labour seats and cause the Patronage Secretary to move the writs in Newcastle-under-Lyme, Swindon, and Birmingham, Lady-wood, all of which seats have been unoccupied for far too long?

Mr. Peart: There is nothing unusual in this. Previous Administrations have had longer periods—

Sir G. Nabarro: The right hon. Gentleman must not blame me for that.

Mr. Peart: I am not blaming the hon. Gentleman, but he supported a previous Administration.
This is a matter for the Patronage Secretary. He was present when the question was asked last week, and he knows the views of the House on it.

Mr. E. L. Mallalieu: In view of the urgent need to deal with the question of the use of the sea bed before it becomes a real danger to the peace of the world, will my right hon. Friend make every endeavour to arrange a debate on the subject?

Mr. Peart: I am aware of this important matter, in view of discussions in the United Nations. But I cannot find time during the week we come back.

Dr. Winstanley: Can the Leader of the House say when we are to have an opportunity to look at spectacles and chew over teeth?

Mr. Peart: The hon. Gentleman has a great interest in these matters, but he knows the Parliamentary procedure. There must be regulations. He will have to wait for a debate on them.

Mr. David Watkins: Further to the question about proceedings on the Divorce Reform Bill, is my right hon. Friend aware that there is a distinct possibility that private Members' business on Friday, 13th June, may be lost? What arrangements will he make to ensure that it is not lost for all time.

Mr. Peart: We must wait and see.

Mr. Amery: Can the right hon. Gentleman say when the Chancellor's Letter of Intent to the I.M.F. is likely to be published and when we shall have a chance to debate it?

Mr. Peart: I discussed this matter during the Whitsun Adjournment debate the other day, when I repeated what the Chancellor said in reply to the House. The negotiations must be concluded first.

Mr. Philip Noel-Baker: Will my right hon. Friend bear that it is becoming the urgent duty of the House to debate Rhodesia, Biafra and the Middle East?

Mr. Peart: I am aware that these are important matters, but I cannot find time during the week that we come back.

Mr. Carlisle: Referring to the Children and Young Persons Bill, which I understand is to be the business for the first day back, may I remind the Leader of the House that, in Committee, the Government gave a great many undertakings? While I do not criticise their courtesy to date, it is important that he Amendments should be put down at a stage when we have an opportunity to consider them?

Mr. Peart: The right hon. Member who leads for the Opposition on this matter has spoken to me about it, and I have given that assurance.

Mr. Leadbitter: Will my right hon. Friend bear in mind Motion No. 195, standing in my name and supported by 100 hon. Members on both sides, urging the Government to extend the powers of the Parliamentary Commissioner to include local authorities? As my right hon. Friend the Prime Minister has said that a study is going on into this matter, can the Leader of the House promise a

reasonably early statement or, better still, a debate?
[That this House is of the opinion that the Parliamentary Commissioner for Administration should have powers to investigate complaints against actions taken by local authorities in accordance with the procedures of section 5 of the Parliamentary Commissioner Act; and urges Her Majesty's Government to amend the Act and include local authorities in Schedule 2 to that Act.]

Mr. Peart: I cannot promise a debate. I have announced the business for the week that we return. I know that this is an important matter, and I will consider it.

Sir H. Legge-Bourke: In view of the increasing number of oil spillages which are causing growing concern both in the newspapers and in the public mind, and in view of the fact that the holiday season is coming on, would the Leader of the House now reconsider his hitherto continuing refusal to arrange for a debate on the Report of the Coastal Pollution Sub-Committee of the Select Committee on Science and Technology and the Government's White Paper in reply thereto?

Mr. Peart: I agree that this is an important matter, but the hon. Gentleman must appreciate that time is limited and that it is difficult to provide time for a debate on a subject in which I know he is interested. I will look carefully at this.

Mr. Clark Hutchison: Will the Leader of the House say whether the Secretary of State for Scotland is to make an announcement about when he intends to implement the Boundary Commission's proposals in Scotland?

Mr. Peart: No. I cannot say that.

Mr. Edward Lyons: In view of the uncertainty surrounding the future of local radio, will my right hon. Friend urge the Postmaster-General to make a statement during the week that we return?

Mr. Peart: I will note carefully what my hon. Friend has said. I will inform my right hon. Friend of his views, and we will see what we can do.

Mr. Longden: The Leader of the House has been asked about railway lines and the sea bed. What I believe


are more important to the nation than either are marriage lines and the marriage bed—

Mr. Speaker: Order. We cannot debate merit, even by punning.

Mr. Longden: Does the Leader of the House really think that he is enhancing the image of Parliament, because the Government have not the courage either to support or oppose this Bill, by providing us with a debate throughout the night on a matter which will vitally affect family life throughout the nation for all time?

Mr. Peart: I think that this is reasonable. In the circumstances, the House will have an opportunity to come to certain decisions.

Sir R. Russell: Reverting to the question asked by the hon. Member for Consett (Mr. David Watkins), will the Leader of the House give us a definite assurance that, if our debates on the Divorce Reform Bill spill over right through the night, they will not replace the Business down for Friday, 13th June, when we are to consider over 40 Private Members' Bills, one of which I am sponsoring, which deserve equal treatment?

Mr. Peart: I thought that my reply was sensible in the circumstances. [HON. MEMBERS: "No."] We must wait and see.

Mr. Dempsey: Will the Leader of the House give us an assurance that he will not suspend discussion of the remaining stages of the Education (Scotland) Bill in order to bring on Private Business, as he did on the last occasion, which meant that hon. Members representing Scottish constituencies had to return after 10 o'clock to continue their deliberations?

Mr. Peart: My hon. Friend knows what happened on the previous occasion. I hope that we shall make progress and complete the Report stage and Third Reading. Progress was made on Wednesday, 7th May. Let us hope that we can complete the remaining stages of the Bill.

Mr. Crouch: Is the Leader of the House aware that this morning the debate in the Committee on the Iron and

Steel Bill was thrown into absolute confusion by the announcement of his right hon. Friend the Minister of Power yesterday on the question of steel prices, without advance notice to the House of that?
Would he give consideration to an early debate on the recommendations and Report of the Select Committee on Nationalised Industries, on the responsibilities, accountability and control of the sponsoring Ministers for those industries, because it is now 10 months since that Report was issued?

Mr. Peart: I agree that it is most important, but we must await a main reply on the attitude of the Government. While this matter is important, I cannot promise time specifically, immediately.

Mr. Maudling: I must press the Leader of the House on Private Members' Bills set down for 13th June, which is the last available day in this Session. In view of the number of Bills involved, and their importance, the Leader of the House should give a quite clear assurance to the House that they will not be allowed to lapse.

Mr. Peart: The right hon. Gentleman is pressing me upon this, but I really do believe we must see how things go.

Mr. Mikardo: Further to the question of the hon. Member for Canterbury (Mr. Crouch), my right hon. Friend says we cannot debate that Report until there is a reply from the Government, but is he aware that already Ministers have taken action arising out of that—the one quoted by the hon. Gentleman and a previous one? Are we not getting the replies by a series of unrelated facts and is not that the silliest way to reply?

Mr. Peart: I did say that I would consider this sympathetically. Select Committees are, of course, important when they make a major report of the kind that has been mentioned. I will try to find time for a debate.

Mr. Boyd-Carpenter: I hope the right hon. Gentleman will go a little further on Private Members' Bills. Can he give this assurance: that if time is lost on Friday, 13th June, thanks to the Divorce Bill running over, the Government will find another complete day for the Private


Members' Bill which otherwise would be lost?

Mr. Peart: The right hon. Gentleman knows the rule, but let me look at this. I have not been dogmatic about it. I know that it is a difficult problem, but I will consider it sympathetically.

Mr. Whitaker: To safeguard Private Members' Bills, which, I believe, hon. Members on all sides of the House would like to consider, would my right hon. Friend ask the small but tightly-knit minority to mitigate their filibuster on the Divorce Reform Bill so that their arguments may be evaluated in the Division Lobby?

Mr. Speaker: We are not debating the Divorce Reform Bill at the moment.

Mr. Bruce Campbell: In view of the Government's decision to give preferential treatment to a Private Members' Bill designed to introduce compulsory divorce, a Measure to which a large section of the community is bitterly opposed, will the right hon. Gentleman undertake to give similar treatment to my Private Members' Bill, which has universal support and which is designed to remedy the grave injustices suffered by some who have the misfortune to be widowed before they reach the age of 50?

Mr. Peart: I cannot give that promise.

BILL PRESENTED

FIREARMS ACT 1968 (AMENDMENT)

Bill to amend section 5 of the Firearms Act, 1968, presented by Mr. Peter Doig, supported by Mr. Adam Hunter, Mrs. Alice Cullen. Mr. Richard Buchanan, Mr. Edward Mr. Taylor, and Mr. Tom McMillan, read the First time; to be read a Second time upon Friday, 13th June, and to be printed. [Bill 145.]

HOUSING [MONEY] (No. 2)

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to make further provision for grants by local authorities and contributions out of moneys provided by Parliament towards the cost of providing dwellings by conversion or of improving dwellings and houses; to confer powers on local authorities to improve living conditions by improving the amenities of areas or of dwellings therein; and for other purposes, it is expedient to authorise any increase in the payments made out of moneys provided by Parliament under Part II of the Housing Subsidies Act 1967 which is attributable to any provision of the Act of the present Session.—[Mr. Anthony Greenwood.]

HOUSING BILL

As amended (in the Standing Committee), considered.

4.25 p.m.

Mr. Speaker: I have posted, as is my custom, the Amendments which I have selected. The hon. and learned Member for Crosby (Mr. Graham Page) has asked whether I might, at the end of this first debate, allow a Division on Amendment (b) on page 4890 and Amendment (e) on page 4891.
I am willing to allow those Divisions. We will now take new Clause 1 plus new Clauses 17 and 18, on which I am prepared to allow a Division when we get to them, if we get to them today, plus Government Amendment 125, and the Amendment to that Amendment—all this in the first debate.

Mr. Frank Allaun: A point of order. Mr. Speaker. As you know, I am not one of those hon. Members who often raises points of procedure, but on this occasion I do ask you very seriously to consider the calling of new Clauses 6 and 7, neither of which were discussed in Committee, on the following grounds—

Mr. Speaker: Order. I am not prepared to discuss with the hon. Gentleman the selection of Amendments. The Chair gives quite a lot of consideration to the selection of Amendments. In doing so, it is bound to displease many people on the Report stage. On the selection I have made, I call the first one.

Mr. Allaun: I repeat, Mr. Speaker, that I am not one to challenge your Ruling, but on this point it seems to me that the trebling of the rents of 400,000 families is involved and that will otherwise not be discussed during the Report stage. There will be no chance of doing so. Surely, it is derogatory to the proper functioning of Parliament, and its good name, if such important matters are not to be discussed here in the House of Commons.

Mr. Speaker: The hon. Gentleman, in spite of his profession, is challenging the Ruling which I have made. I have made a selection and I must stand by that selection.

New Clause

POWER TO INCREASE SUBSIDY FOR OPTION MORTGAGES

At the end of section 28 of the Housing Subsidies Act 1967 (aggregate amount of subsidy under Part II) there shall be added the following:—
'(3) The Minister of Housing and Local Government, the Secretary of State for Wales and the Secretary of State for Scotland acting jointly may, with the approval of the Treasury, by order made by statutory instrument provide that with respect to interest payable for any period beginning on or after such date as may be specified in the order the calculation required by subsection (1)(b) of this section shall be made as if such higher percentages as may be specified in the order were substituted respectively for the two per cent. mentioned in that subsection and the one and three-quarters per cent. mentioned in subsection (2) of this section.
(4) An order under this section—

(a) may make different provision with respect to different cases or different classes or case and, in particular, with respect to repayment contracts providing for different rates of interest;
(b) may except from its provisions repayment contracts providing for such rates of interest as may be specified in the order; and
(c) may include provision enabling the Minister to determine a rate of interest as representative of the rate applicable at any time under repayment contracts of any description made with a qualifying lender during any period and relating to loans not subsidised under this Part of this Act and, if that rate is different from that then applicable under any repayment contract made with that lender during that period but relating to a loan so subsidised, to treat that contract for the purposes of this section as if the rate so determined were then applicable thereunder.


(5) The power to make an order under this section includes power to vary or revoke such an order by a subsequent order; but no such order shall be made unless a draft thereof has been laid before and approved by the Commons House of Parliamenr.—[Mr. Greenwood.]

Brought up, and read the First time.

The Minister of Housing and Local Government (Mr. Anthony Greenwood): I beg to move, That the Clause be read a Second time.
The purpose of the Clause to which I referred in the debate we had last week on the housing programme is to enable the Minister of Housing and Local Government, the Secretary of State for Wales and the Secretary of State for Scotland, acting jointly, to make an Order adjusting the option mortgage subsidy. The Order is to be subject to approval of the Treasury and an affirmative Resolution of the House of Commons; and it may be varied or replaced by any subsequent Order. This power is needed to keep the option mortgage scheme doing what it was originally devised to do, that is to say, to help people with moderate incomes to buy their own homes by giving them benefits roughly equal to those benefits available to people with higher incomes.
With an ordinary mortgage a person is excused paying income tax on that part of his income he uses to pay mortgage interest. With an option mortgage he gives up the right to tax relief on that interest, and instead has part of the interest on his loan paid by a Government subsidy. When the scheme was introduced the subsidy was expressed, for the ordinary kind of building society mortgage as a flat 2 per cent. reduction on the interest charged to the mortgagor. But while the subsidy has remained as a flat rate the interest charged by building societies has risen.
When the 2 per cent. subsidy was calculated the rate of mortgage interest recommended by the Building Societies Association was 6¿ per cent. Since then it has risen by steps to 8½ per cent. When the scheme was introduced a family man with modest earnings by opting into the scheme could put himself in a position reasonably comparable with that of the man who could get tax relief on earned income at the standard rate.
This no longer holds. The position has to be restored to secure three things, first, that the value of the option mortgage subsidy is broadly related to normal tax relief, secondly, that the value of the subsidy is greater than the tax relief to a taxpayer who pays his mortgage interest wholly out of earned income taxed at the reduced rate of 6s. in the £—which, under the Budget, is now the only reduced rate of tax; and thirdly, that the value of the subsidy is less than the value of tax relief to a taxpayer who pays his mortgage interest wholly out of earned income taxed at the standard rate—there is, of course, no intention to make the option mortgage subsidy more favourable than standard tax relief.
4.30 p.m.
It may be that a scale of rates of subsidy coresponding to rates of mortgage interest would fit all cases better than one new flat rate of subsidy. Just one new rate might lead to anomalies with certain mortgages with low fixed rates of interest. In this connection I have invited representatives of the Building Societies' Association and the other lending agencies, by which I mean the Life Offices Association, the British Insurance Association, the Friendly Societies' Liaison Committee and the local authority associations, to discuss in detail how some suitable arrangements might be worked out.
Two considerations will govern the exercise of this power to make an Order. These are changes in mortgage interest rates on the one hand and changes in taxation arrangements on the other. If changes in mortgage interest rates had been the sole relevant consideration, it might have been possible to incorporate in the Bill itself some new rate, or rates, of subsidy to fit all possible rates of mortgage interest. But changes in taxation cannot be anticipated. Nor would it be reasonable to provide for anyone's opting out of the subsidy unless or until the Building Societies' Association modifies or withdraws its objection on administrative grounds to a second option.
The new Clause adds three subsections to Section 28 of the Housing Subsidies Act, 1967. The new subsection (3) empowers the three Housing Ministers acting together with Treasury approval to make an Order replacing the subsidies

of 2 per cent. and 1¾ per cent. by higher subsidies. While, as I have indicated, the precise method of exercising the Order-making power will be worked out after consultation with the associations representing the lending agencies, it seems right to ensure as far as is possible at this stage that the power to make such an Order is wide enough to cover certain possibilities set out in a new subsection (4) to Section 28 of the 1967 Act. These, however, have been included without prejudice to the discussions to which the associations have been invited and if these discussions lead to the view that something extra or something different is required, the Government will propose further Amendments in another place.
The new subsection (4)(a) allows the Order to be made to fix different rates to fit varying circumstances and in particular to set out a scale of rates of subsidy corresponding to different rates of mortgage interest. This would enable the subsidy to fit future changes in the Building Societies' Association's recommended rate as well as existing differences amongst various lending agencies.
The new subsection (4)(b) allows the Order to keep the present rates of subsidy for certain cases. This is needed to deal with certain existing mortgages with low fixed rates of interest when an increase in subsidy would be unjustified and could even result in an option mortgagor receiving benefit in excess of the standard rate of relief.
The new subsection (4)(c) forestalls the possibility of collusion between mortgagor and mortgagee in the event of the Order setting out a scale. Such a scale would set out a rate of subsidy corresponding to a band of mortgage interest rates and so, if the mortgage rates were near the top of a band, the mortgagor might be tempted—and I am bound to say that I do not think that this would often happen—to ask the lender to give him a slightly higher rate of interest to bring his rate into the next band and so attract a higher subsidy. The Minister concerned is accordingly given power to specify and take for subsidy purposes the ordinary rates of interest charged to a non-option borrower of the class into which the borrower would fall if he were not an opting mortgagor.
The new subsection (5) extends the Order-making power so as to allow an


Order to be varied or revoked by a subsequent Order. It also provides that no Order made under the Section is to be made unless a draft of the Order has been approved by an affirmative Resolution of the House of Commons.

Mr. Peter Walker: I should like first to protest at the Government's increasing tendency to introduce substantial and important legislation—and we welcome the new Clause, although we are suggesting a number of Amendments to it—by moving a new Clause on Report. This prevents any Second Reading debate and any Committee debate and limits opportunities for discussion of what may be a matter of considerable importance to Report and Third Reading. With matters such as leasehold reform, with which we shall deal later when we discuss the appropriate new Clause, and a complete revision of the option mortgage scheme, it would be far better for the Government to introduce separate legislation which could be quickly handled in the proper way through all the Parliamentary procedures.
The Minister cannot protest that on this occasion it was a matter of speed or time, because the problems facing those with mortgage options have been in existence for many months. The Opposition have pressed the Government to revise the mortgage option scheme because it was no longer functioning in the manner originally intended. Yet for months no action has been taken. But suddenly, at the end of the Committee stage of a Bill which does not deal in any way with mortgage options, the Government introduce a new Clause, allowing the House little time in which to study it and amend it and limiting discussion of it to Report and Third Reading. They also somewhat delay the passage of an important Bill through the House of Commons.
The Minister explained why the new Clause was needed. The reason is that the Government have completely failed to fulfil their promise to lower mortgage interest rates. If the original promise had been fulfilled, the promise which the Government made in their election manifestos and party political broadcasts there would have been no need for the new Clause. It shows the failure of the Government to run the economy that

since the original scheme was devised mortgage interest rates have gone up from 6¾ per cent. to 8½ per cent., and belatedly the Government are expressing their intent to discuss the matter further and then perhaps to take some action.
Here I come to the most disappointing factor in the Minister's speech. He gave no indication of when the Government expect to act and no indication as to the extent they hope to act. We are discussing a new Clause not to take belated action, but in the middle of the Minister having discussions about action. There is no reason why the Minister should not have completed discussions about a varying scale many months ago. He must have known when mortgage interest rates went up to 8½ per cent. that this problem was facing the mortgage option scheme, and there was no reason why he could not enter discussions at that stage about the possibilities of scale rates to deal with this problem. Only now, many months later, has he introduced a provision to provide powers perhaps to do something in future, and he says that he is having discussions about the possibility of a scale.
He has given no indication of the possible cost of the new Clause on the basis of restoring the situation to what it was when the scheme was introduced. I hope that the Government will tell us the extent to which they intend to deal with the problem, the estimated cost, and the time scale. Is there to be any suggestion of retrospective payment? Will the Government provide this additional assistance only from the time when this scheme is put into effect, or will it be given from the time when mortgage interest rates went up to 8½ per cent?
The Minister said that the object was to see that the amount equalled normal tax relief—something more than 6s., but less than the standard rate. After the mortgage option scheme came into operation certain allowances were increased. This lifted some people into new scales of tax payments—

Mr. Eric Lubbock: Family allowances.

Mr. Walker: Family allowances are instanced by the hon. Member for Orpington (Mr. Lubbock), and there were other similar increases. As a result, a whole host of people who had entered


mortgage option schemes suddenly found that they were in the wrong scheme and were thereby deprived of the full tax refunds they would otherwise have enjoyed. When looking at variations of tax we should not look only at the actual levels of taxation. We should look also at the effects of grants and allowances on people in the scheme.
There is the suggestion that the Minister should be able to make a scale because there may be people on the lower than average rate, but the right hon. Gentleman did not make clear whether the scale would apply also to those on a much higher rate. We talk of the terrifying position of most people having to pay 8½ per cent. but, as many hon. Members know, there are many people with local authority mortgages who will pay as much as 9½ per cent. I therefore presume that any scale will deal with those who pay above the standard 8½ per cent. charged by building societies as well as dealing with those—the minority—who are fortunate enough to have obtained mortgages at a lower level.
It is right and sensible that there should be power to vary, but after major increases of mortgage rates there should be a compulsion on Ministers to declare their intention fairly quickly on this topic. One of the present disadvantages is that a lot of people who will consider home ownership if the mortgage option scheme is substantially improved will look for a house, start negotiations, and so on, but the new Clause gives them no indication whether the changes will take place this year, or next year, or at all.
It is therefore important that if in future there is an increase of some substance in mortgage interest rates the Government should make fairly clear the date on which they intend to take action to improve the position. People in a state of uncertainty cannot start negotiations, for example, with their landlords or start talks with building societies. They can only do that when they know clearly when the new scheme will operate, and how it will operate.
We agree with subsection (4)(a). Paragraph (b) deals with some cases in which there might be an improvement in the standard rate, and I can see a need for that in a minority of cases. I am, however,

more concerned with paragraph (c), in which we have the question of collusion to get a higher rate. We cannot discuss that matter yet, because we have no indication of what scales may be involved. Our feeling is that the paragraph is drawn far too widely for the purpose mentioned by the Minister. My hon. Friend the Member for Crosby (Mr. Graham Page) will later seek to deal with this aspect in rather greater detail.
4.45 p.m.
It will be seen that we have tabled a number of Amendments to the proposed new Clause. The first is Amendment (a), in line 4, after 'jointly', insert:
'shall as soon as may be practicable whenever any change in interest rates has been recommended by the Building Societies Association to its members, inform Parliament of their intentions as to the exercise of their powers under this section and'.
We seek here to deal with the uncertainty that will otherwise prevail in future whenever there is a change in mortgage interest rates. As I say, I agree with the Minister taking the power to vary the mortgage option scheme, but we should write into the Bill something to which hon. Members can refer when demanding of Governments, of whatever political complexion, whether they intend to vary the mortgage option scheme. Otherwise, there will be considerable uncertainty in the whole house purchase market, with detrimental effects. Although we shall not press the Amendment to a Division, perhaps the Government will see no objection to it. We have not specified a time. We have just asked the Government to agree that in future when there is a change in interest rates they will declare to the House how they intend to use their powers to vary the mortgage option scheme.
Next, we have Amendment (b), in line 4, live out 'may' and insert
'shall before 31st December 1969'.
This Amendment seeks to pin down the Government to a date by which they shall act. We have inserted 31st December, 1969, but we should have liked a much earlier date because we naturally hope that the Government will have acted long before then. We recognise that time is needed to make the administrative changes required, so we have not put in an earlier date.
All hon. Members will know the very real hardship caused to people with mortgages by the present appallingly high rates of interest. A person obtaining an 80 per cent. mortgage on the average priced new house is now paying £2 15s. a week more in mortgage repayments than was the case when the Labour Government came to power. Those in the mortgage option scheme are, by definition, people with large families or low total incomes, and they must be the most adversely affected in terms of personal hardship by the enormous increase in mortgage repayments. They are in great desperation and face a very real and appalling personal problem.
We have criticised the Government for their delay in taking action to vary the mortgage option scheme. Therefore, we want an undertaking from them about the date on which these proposals will come into operation. For the Government not to accept this Amendment would be to show that there was very little hope for these people for many months to come. I cannot believe that the Government cannot get the scheme into operation long before the date we have mentioned, but if that is the case some immediate aid must be given to these people.
The next Amendment is Amendment (c), in line 6 leave out from 'after' to second 'the' in line 7 and insert '31st December 1969'. The theme here is similar.
Then we have Amendment (d), in line 8 leave out from 'if' to 'were' and insert
'four per cent. and three and a half per cent.'.
This Amendment seeks to find out the extent to which the Government wish to provide help. All that it would do would be to return people to the position in which they would have been if under the present Government, mortgage interest rates had not gone up. We seek to put them in the position in which they would have been if the Government had fulfilled all their election and other promises.
I am sure that the Minister will consider that, if anything, this Amendment is modest. Perhaps he will ask us to withdraw it so that he can insert a larger figure. I am sure that he will want to fulfil those election promises. To do so, he will have to insert a larger figure than

we have inserted. If the Minister wants to do that we will be only too pleased to withdraw the Amendment and accept an Amendment which substitutes a more substantial figure.
The Minister laughs at this possibility. He is laughing at the possibility of this Government fulfilling their election promises. Perhaps by now that has rather sadly become a laughing matter.
Amendment (e) is a matter of real concern about the powers in subsection (4)(c). We believe that these powers could be interpreted in a way which will give the Government power to exercise authority over what should be the mortgage interest rates charged by building societies. We will, therefore, be probing that matter later.
I understand that we are permitted to discuss new Clauses 17 and 18. New Clause 17 is important. It reads:
Any person who effectively elected that a loan to him should be subsidised in accordance with Part II of the Housing Subsidies Act, 1967 may by notice in writing to the lender (in such form, at such time and in such manner as the Minister may direct) elect that the loan shall, as from the 1st April, 1970 or on any third anniversary of that date, no longer be so subsidised.
The option mortgage scheme has failed for two reasons. First, the original effects have not been what people anticipated, due to the failure of the Government to run the economy properly. Secondly, a large number of people who entered this scheme have since deeply regretted it and would very much like to get out of it.
People have entered the scheme for one of two reasons. Either tax changes and increased allowances have put them into a position where they would be obtaining more benefit than if they were obtaining full tax rebates, or, alternatively, their incomes have gone up and they now find themselves at a disadvantage which they would not be suffering had they not gone into the scheme but had taken advantage of income tax rebates.
One great advantage of an option mortgage scheme would be to advise young people with prospects of increased earnings some years hence that at this initial period, instead of going on the council housing list and going into a council house, they should receive assistance in


owning a house of their own and then, when their earnings rise, to get out of the option mortgage scheme. This is the main problem facing us. What happens is that young people go along to their solicitor or an estate agent and ask, "Should we take advantage of the option mortgage scheme?" The right professional advice to such young people, if they have any prospects of improving their position, must be, "No, we do not advise you to go into the scheme. Although it would be of advantage to you now, you will find in five years' time, if your salary or wages increase, that you will regret being in the scheme because you will be worse off than had you decided not to go into it."
As hon. Members know, once people are in the option mortgage scheme they are in for the whole mortgage period and there is no possibility of getting out. So the moment that a person rises from below the 6s. tax level to the standard rate, or above, he is at a disadvantage through being in the scheme. This is why only 6 per cent. of all people with mortgages are taking advantage of the option mortgage scheme. The Minister recently expressed how contented he was with that figure. He thought that it was what he originally expected. Of course it was what he originally expected, because he brought in an option mortgage scheme which had this great disadvantage.
The only excuse that I have heard against the proposal in new Clause 17 is that administratively the building societies would find it impossible to do. The Minister once quoted a letter in this House on another topic saying how difficult the building societies would find it to deal with another issue connected with the option mortgage scheme. The Minister, therefore, said that this would be more difficult to do.
I accept that the building societies would find it administratively difficult, if not almost impossible, for people to come in and out of the option mortgage scheme whenever their tax position changed. Therefore, I accept that we must lay down that there will only be certain points at which they can change—and perhaps only once or twice during the mortgage period. New Clause 17 suggests an option once every three years. I am willing to concede that if that

imposes an enormous administrative burden it could be changed perhaps to the fifth or the tenth year, or something of that nature. But I am determined that there should be a point in time, some years after the commencement of the option mortgage scheme, when people in the scheme can get out of it.
I have spoken about this to the building societies, including some of the leading building societies. They all say that it is impossible to have a scheme where people can go in and out. I accept that. But they do not and they could not possibly say that it is administratively impossible for them, at the beginning of every fifth year's repayments, to say to those in the scheme, "If you wish, you can now go out of it". Anybody thinking of the administration involved will recognise that, although there would be an additional administrative expense, it would be small. If necessary, some form of allowance could be made in the tax rate charged to building societies to meet the relatively minute administrative expense of saying, to those in the scheme, at the end of five years, that they have an opportunity of getting out of it.
I plead with the Minister to go back to the building societies on this matter, because I believe that they have misunderstood him. I believe that they have taken the Minister as meaning that people can get out whenever they wish, or that they have to circulate everybody in the building society movement whenever they make a break. They do not need to do that at all. All we are asking is that those who go into this scheme should periodically—every three or five years or perhaps twice in the whole mortgage period—be given an opportunity of getting out and taking advantage of the full tax rebates.
I believe that new Clause 17 has immense merit. It will give many young people who cannot at the moment contemplate buying a house the opportunity of doing so. With the present flagging housing figures I should think that the Minister would grasp at any thing which will stimulate and improve the market. The Minister makes a great mistake in thinking that, having put up the mortgage interest rate to 8½ per cent., this will bring in the flow of funds which the building societies so desperately need, will stop the shortage of mortgages, and


will stimulate the housing programme again. The mistake in that logic is that when money is attracted in at the level it now is, mortgages have to be charged at 8½ per cent. and people cannot afford to take advantage of the money, if it is there.
This is the problem facing the Government. That is why they must bring about improvements in the scheme. The most important substantial improvement that they can bring in is to make a break in the option scheme available to those who have taken advantage of it.
If the Government do not accept new Clause 17 today we will press it to a Division. In any event, I hope that they will go back to the building societies and quickly come back to this House with some form of legislation to meet the principle outlined in new Clause 17.
Finally, I come to new Clause 18 which embodies another important principle. This new Clause is designed to see that in future the 100 per cent. mortgage scheme is not linked to the option mortgage scheme. The 100 per cent. scheme is a matter of immense importance to people on low incomes and devoid of capital. I see no reason why this scheme should be linked, as it has been in the past, with the option mortgage scheme. It is a principle which will encourage the spread of home ownership—and the next Conservative Government will substantially widen the scope of the 100 per cent. scheme—but this cannot be done if it is linked to those who take advantage of the option mortgage scheme. It is an unnecessary and unwarranted link, and in new Clause 18 we endeavour to change it.
5.0 p.m.
In the limited time that has been made available to us to amend the new Clause moved by the Government, belated as it is, vague as it is, with no dates, we have, by a series of Amendments and new Clauses, endeavoured to bring about substantial improvements to the option mortgage scheme, and if we do not succeed with this Amendment tonight, it outlines the line of action that we will take when we have a majority in this House.

Mr. Lubbock: I agree with the hon. Member for Worcester (Mr. Peter Walker) that the Government's new Clause has come very late in the day. The Minister cannot possibly pretend that

he has not for many months, and indeed longer than that, known of the difficulties of people who went into the option mortgage scheme, because the changes in family allowances to which I referred in in an intervention in the hon. Gentleman's speech have been causing difficulties ever since the 1968 Budget in which these changes were introduced.
I am glad of the opportunity to emphasise the point made by the hon. Gentleman, because it is a serious one. These people went into the option mortgage scheme in all good faith thinking that they would benefit from it, and indeed they would have done had there not been this substantial change in our tax and allowances system. Suddenly, at a stroke of the Chancellor's pen, they find that the advantage is wiped out and they are stuck with the option mortgage scheme until they transfer the mortgage or move to another house.
This is monstrously unfair. These family allowance increases which we all welcomed at the time were intended to benefit people with large families, yet the Government have taken away all the money with another hand from those breadwinners who have taken advantage of the option mortgage scheme. This is very mean indeed, and therefore I strongly support new Clause 17 which gives these people some opportunity of amending their financial situation at a future date.
I would not be tied to the proposals submitted by the hon. Gentleman, and I do not think that he would either. All that he is trying to do—and this is a very helpful attitude—is to make things as easy as possible for the building societies who, no doubt justifiably from their point of view have said that they cannot have people opting in and out of the scheme every few weeks and creating administrative chaos.
If the Minister is to have these discussions with the building societies and other lending agencies about the new Clause which he has put forward, he might discuss with them this other matter at the same time. What better opportunity could there be for reviewing the situation and seeing whether, in the light of their experience, the building societies, local authorities, and so on, might be prepared to make some concessions on this matter.
The time is probably opportune now for doing that because of the tremendous advances in mechanised accounting which have taken place in the lending agencies in the last few years. If one reads the Building Societies Gazette, almost every issue contains news of computerisation by some of the medium-sized building societies and the co-operative arrangements which have been made by some of the smaller societies to acquire data processing facilities. This rather transforms the position and makes it easier for these societies to allow people this option perhaps every three years, or perhaps even more frequently. I would have been rather more ambitious than the hon. Gentleman, but I suggest that this could be a matter for discussion between the Minister and those authorities when he is discussing with them the other important matter of how to improve the percentage subsidy under the main option mortgage scheme.
It is also unsatisfactory that the Minister has produced this new Clause without saying anything about the cost. Although we wish to make some redress to the people who have been hoodwinked into entering the scheme, there is another question that we have to face, and that is the amount by which Government spending will increase as a result of the concession which the Minister plans to make. The right hon. Gentleman must have some figure in mind. Although he is not able to tell us precisely the details of the scheme—quite rightly, because it would be discourteous to the lending agencies to introduce it without first discussing it with them—I am sure that he has spoken to the Chancellor of the Exchequer and is at least able to say what the overall sum is, even if he cannot be precise about the percentage involved.

Mr. Hugh Rossi: Will the hon. Gentleman agree that the cost is likely to be provided by raising the cost of meals in comprehensive schools?

Mr. Lubbock: I do not think the Permanent Secretary would allow that. I do not quite understand these abstruse accounting details and revelations made by the Secretary of State for the Social Services every so often, nor would it be proper to go into them in the course of this debate. What I am concerned about

is to know what the total amount of the expenditure is to be, and I think that the Minister ought to give us that figure before the conclusion of this debate, because we are representing taxpayers as a whole as well as option mortgage holders in particular when we speak on this subject.
If the Minister is not prepared to divulge the overall figure, perhaps he will till us what would be the cost of accepting the Amendment moved by the hon. Member for Worcester, because then we could at least do the arithmetic and calculate for our own benefit what amounts would be necessary to improve the scheme by ½ per cent., 1 per cent., 1½ per cent., and so on, and then form a judgment on what was merited in the present difficult economic situation.
As regards the Minister's difficulty about the different rates of interest, I have a suggestion to make which I think will get over the difficulty of evasion that he mentioned. Instead of having different rates of subsidy appfying to bands of mortgage interest rates, one could adjust the percentage level according to those bands. Perhaps I can explain what I mean by using an arithmetical example.
Let us say that between mortgage interest rates of 5 per cent. and 7 per cent. the subsidy is to be 2 per cent. as it was when the scheme was introduced, and the Minister decides that it would be appropriate for a 3 per cent. subsidy to be given for mortgage interest rates between 7 per cent. and 8 per cent. There would then be the difficulty that a person would be better off with a mortgage interest rate of just over 7 per cent., than just under, because he would get 1 per cent. extra subsidy. Instead of doing it that way, we could bring the level back to a certain percentage according to those bands. Between 5 per cent. and 7 per cent. we could bring the interest rate back to 4¾ per cent., where it was when the scheme was introduced. Above 7 per cent. and below 8 per cent. we could bring it back to 5 per cent. Above 8 per cent., and below 9 per cent., we could bring it back to 5¼ per cent. I think the Minister can see that if that were done there would be no advantage to the mortgagor in accepting slightly higher rates of interest when he was on the margin between one hand and another. I hope that that suggestion will be helpful to the


Minister in his discussions with the building societies.
In spite of the legitimate criticisms that one can make about the delay in bringing in the new Clause, I shall accept it, as will my party, because it is at least a belated recognition that the option mortgage scheme has not been as generous as even the Government wanted it to be when it was first introduced, and we are obliged to do something for this section of the public in spite of the great economic difficulty which the country as a whole is facing.

Mr. Walter Clegg: Like my hon. Friend the Member for Worcester (Mr. Peter Walker), I welcome the new Clause, which is the culmination of many months of probing and nattering by back benchers. It illustrates to those outside the House, who sometimes doubt the value of Parliament, just how grievances can be remedied by Parliamentary action. On the other hand, I echo the criticisms of my hon. Friend and the hon. Member for Orpington (Mr. Lubbock) about the way in which this has been done. We welcome it and would rather have it done this way than not at all. But there are grave disabilities arising out of this procedure, especially for those of us on the back benches on this side of the House.
The Government have behind them an enormous machine able to provide them with statistics and papers, making their task relatively easy. Over here we have to act as our own research team, relying on what small facilities this House provides for us. We have not the time here, in considering this new Clause, to research in depth. We have been very busy this week with the Finance Bill, in which all hon. Members are interested. Now we have this Bill, and it is not easy for hon. Members to deal adequately with it.
The other thing that we lack in this procedure—and the Minister is well aware of this—is that in Committee members of the Committee receive advice and comments from outside interested bodies. This procedure does not give us time for that to happen. This is important, because it is the only chance we shall have to do anything about this except, possibly, when we consider Lords' Amendments. This concerns me

because it is one of the most valuable things which occurs during the passage of a Bill, especially valuable for back benchers.
I also echo the protests made about the cost of this. The fashion being set by the Secretary of State for Social Security and the Chancellor is to announce something without giving the cost. It is too much to ask us to keep putting up with this. We should know before the end of this debate what the cost will be. It should be calculable, and I do not know why the Minister could not have brought it out in his opening speech.
May I also protest—this is a hobbyhorse of mine—about the verbiage with which we are being presented. I found the greatest difficulty in understanding (4)(c), and were it not that my hon. Friend the Member for Crosby (Mr. Graham Page) is a valuable guide through this jungle of verbiage I would still be wondering what it was all about, or at least would have had to listen to the Minister. I did not believe that it was anything to do with what he said. Now that I am enlightened I am able to comment upon it with, perhaps, a little more intelligence than would otherwise have been the case.
Paragraph (4)(a) deals with:
… different provision with respect to different cases or different classes of case and, in particular, with respect to repayment contracts providing for different rates of interest.
I wonder whether it would be possible for any regional variation under this. It might be a useful power to have, because there are parts of the country where a more favourable rate would be a very useful adjunct to regional policies generally. It would help us in the North of England, and in the West, where houses are available standing empty. This might prove to be an attractive course for the Government, to be able to offer regional terms.
5.15 p.m.
What is the effect of this on local authority mortgages? There was a time after the war when local authorities issued mortgages with fixed rates of interest. Some building societies did it for a while, with the rate about one half per cent. above the normal lending rate, the fixed rate being a guaranteed one. Perhaps the Minister can comment on this.
My hon. Friend referred to our Amendment (b), and the reason why we ask the Minister to take action before 31st December, 1969, is that we want to know when an Order under this new Clause wil come before the House. It is popular to announce this, but we would be much more reassured if we knew when it was coming. Would it be this Session or next Session? Interested as all backbenchers will be in this, it is nothing like the interest of those who have option mortgages, and the sooner they are put out of their agony the better. They want to know if it is this year, next year, some time or never. It may be never unless the Government accept our arguments for a time limit for the first Order. I am assuming that the Minister will be able to tell us in winding up about this, because he would not have rushed into the Bill unless he was intending to act soon—I hope. I can see the reason for the distrust, among my hon. Friends, of (4)(c) which could lead to some interference by the Government with building society interest rates.
I am particularly interested in new Clause 17, because it relates to some cases that have been referred to me and which I have raised with the Minister. We discussed such cases in the Finance Bill last year, dealing with those who have opted for the mortgage but because they have a big family and the family allowance is "clawed back" then get no benefit. I have one case where it costs a man more than it would have done had he not exercised the option. Since last year mortgage interest rates have risen, and I am not satisfied that it will help those who suffer as a result of the family allowance "clawback". I hope the Minister will tell us whether this is so.
My hon. Friend spoke about the difficulty people had in making this decision under this law of the Medes and the Persians, when things cannot be varied until the end of the mortgage. As we know, the original pamphlet was slightly misleading, or could be so, and we were promised that it would be reprinted.
I have had to advise people who have come to my office and asked, "Should we exercise the option or not?" I have found this one of the most difficult professional decisions to make. It is difficult

to say to young people, "Are you limiting your ambition?" Am I to say to them, "I do not think you will ever get to a stage where you pay standard rate of income tax and where this will be to your advantage"? The only people to whom it may be really clear that it would be an advantage are those getting on in years who want only a small mortgage which they can pay off on retirement. Such people may have been in the same job and when looking at the general rate of increase one could say that it would be to their advantage.
The numbers of people taking advantage of the scheme bears out the validity of our arguments. It should be possible at stated intervals of three or five years, or on a change of Government, to give the option to people to change their minds. People's circumstances are infinitely variable. To ask them to take a once-and-for-all decision at the beginning of a mortgage is very wrong. I support new Clause No. 18 as I can speak on this with practical experience. The number of defaulters on building society or local authority mortgages is very small indeed. Most people when they get a house of their own consider paying off the mortgage as their first priority. Losses by building societies, local authorities and other lending agencies in this respect must be more than tolerable.
In the past normally one had to put down about 30 per cent. of the price. Gradually through indemnity guarantee schemes the rate went up to 80 per cent., 85 per cent., 90 per cent. and 100 per cent. I had misgivings and I wondered whether people with small capital would repay, but in my experience I have found this illusory. There is no worry at all. If we were to go forward with this idea of a 100 per cent. mortgage scheme not being limited to those who took out option mortgages, we should give an enormous boost to the housing programme. We would bring it within the reach of young people.
When young people go in for buying a house a major problem is not only that of getting a mortgage and a deposit, but that of furnishing the house. Often the carpet costs as much as the land on which the house is built. They also have to furnish their house and obtain all the necessities of life. This new Clause would


make a real impact on housing. It would enable a new group of people to own their houses, and the building societies and the State would not suffer. These Amendments and new Clauses suggested by the Opposition would make the option mortgage scheme an altogether better proposition. The position will be improved by this Bill unamended, but nothing like to the same extent as it could be if the Government would accept our Amendments.

Mr. James Allason: I have been for a long time a keen supporter of the idea of a good option mortgage scheme. I was delighted when at the Tory Brighton conference in 1965 my hon. Friend the Member for Finchley (Mrs. Thatcher) announced Tory policy and said that it included a very substantial option mortgage scheme.
I think that was the first announcement of this type of proposal. In the Queen's Speech of 1965 the Government fell into line and announced their intentions. They introduced a Bill which was overtaken by the General Election of 1966, and then until November, 1967, that they came forward with this scheme, which was geared to an existing mortgage rate of 61 per cent. It was 6½ per cent. by the time the Bill became an Act. It was carefully designed for a 2 per cent. subsidy in lieu of tax relief. If mortgage interest rates fell bellow 6 per cent. there would be a corresponding reduction in the subsidy. It was a complicated scheme. I would much prefer to give a rebate as if there were complete tax relief at maximum rates, than the type of scheme which was introduced.
It is tragic that the Government at that time did not foresee that interest rates would rise. They were thinking then in terms of reducing interest rates and there was provision in the Bill in case the rates came down. The tragic thing is that interest rates have risen as high as 8½ per cent., but until now the Government have done nothing to remedy the matter. From the wording of the scheme it would appear that there will be no retrospection and only after the Order is introduced will a new rate of subsidy come into effect. This is sad for those who are suffering under present conditions. It would be useful if the Minister would

say that for the second half of the year he will give a generous rate of subsidy to make up for the unhappy first half of the year. Perhaps from next April we could go on to a rate of subsidy which is natural.
Amendment (a) requires an early decicision when there is a change of Bank rate. This is very necessary. Even now borrowers are coming forward day by day and every new borrower has to decide whether to take advantage of the option mortgage scheme if interest rates rise, or even if they fall. He must know whether the Government will vary the scheme or that they intend to carry on with the existing rate. Obviously the Government cannot make an announcement simultaneously with the building societies' change of rate, but they have an obligation to make an announcement very soon about what they intend to do in regard to the option mortgage scheme. Having let this ride for two years, the impression is that they have made up their minds that they want to forget about the problem, but that problem does exist.
5.30 p.m.
Amendment (d) raises the question of the rates the Government intend to insert. It is very helpful of us to give them an opportunity to go some way towards redeeming their election pledges of lower interest rates. Even so, I do not think that it would be sufficient merely to bring them down to 4½ per cent. That would hardly meet the ideas of at any rate the right hon. Member for Belper (Mr. George Brown) of what interest rates should be. It is not to be forgotten that instead of the Government fulfilling their pledges on lower interest rates for house owners we have seen interest rates go up and up.
I now turn to new Clause 17. We all recognise the extremely unsatisfactory position of anyone who must consider whether he wants to enter a option mortgage scheme. He must go into it for life. The usual advice to such a person is to say that if he thinks he will ever come on to the full rate of tax he should not go into the scheme. That is the present situation, but it was not the situation when the scheme was introduced. Nevertheless, as it has got so much out of hand it is necessary to allow the possibility to take the option at intervals. My right hon. Friend the Member for Worcester


(Mr. Peter Walker) has indicated that this is feasible.
Next, I turn to what the rate should be, taking the scheme as it is. The Minister mentioned the possibility of tax changes, which is highly relevant. If only we had a simple scheme giving relief equivalent to tax relief at full rates of tax, less earned income allowances, there would be little difficulty. But there is the possibility of income tax going up or down. We have just seen a change in the intermediate rates of tax, and more people are coming into standard rates because of family allowances. This means that any change is liable to involve a need for revision of the percentage figure.
It is curious that this was not envisaged in 1966, when the Measure was introduced. I suppose that the Government had then made up their mind that taxation would remain at a consistently high level for years, and that therefore this factor need not be considered.
The other factor with which we have been dealing mostly this afternoon is high interest rates. The Government did not foresee that interest rates would continue to rise, and I acknowledge that they could not have foreseen the appalling financial position of the country. I do not think that anyone could have foreseen the mess into which the country could be brought, which has necessitated the current appallingly high interest rates.
Introducing the Measure in November, 1966, the Minister of Housing and Local Government pointed out that while the standard rate of tax was 8s. 3d. in the £ the two-ninths reduction for earned income allowance made it equivalent to 6s. 5d. He said that the 2 per cent. subsidy on the then interest rate of 6½ per cent. was equivalent to 6s. 2d., so that there was fairly close correspondence between relief on the full rate of tax and the alternative scheme. If one was on the full rate of tax it was preferable—though only by 3d.—to take advantage of tax relief. But it was a close matter. If interest rates fell to 6 per cent. the 2 per cent. would be equivalent to 6s. 8d. on the subsidy scheme, and one would be better off in that than would be the standard ratepayer with his tax relief.
However, mortgage interest rates have moved in another direction. By the time the Bill came into force the rate had

risen to 6¾ per cent., and the subsidy was then equivalent to 5s. 11d. Now that interest rates have risen to 8½ per cent. it is only the equivalent of 4s. 8d. It is worth noting that the intermediate rate of tax of 6s. in the £, with a 2s. 9d. reduction for earned income, is also 4s. 8d. So at present anyone whose highest rate of tax is 6s. in the £ will not find it worth his while going into the mortgage option scheme. This is a ridiculous situation, and one that I trust the Clause will remedy.
What figure has the Minister in mind? He must increase the subsidy beyond 2 per cent. If he raises it to 2½ per cent that will only be equivalent to 5s. 11d. in the £ at the present mortgage interest rate of 8½ per cent., and therefore it will not be good enough. That is nowhere near the 6s. 2d. at which the scheme started.
A 2¾ per cent. subsidy, provided interest rates are 8½ per cent., would be equivalent to 6s. 5d. in the £, which means that it would be equivalent to the standard rate of tax on earned income. I trust that the Minister has 2¾ per cent. in mind.
I think that I have shown that whatever the mortgage interest rate is there must be an equivalent percentage sum. I think that this is what the Minister had in mind when he announced his variable band, and I certainly hope that it is. But I urge him to consider going not to 2¾ per cent. for the rest of this year but to 3½ per cent., in order to give the equivalent of standard rate tax relief to those who are in the scheme. Then in April next year he could, provided tax rates and interest rates remain the same, it would be reasonable to drop it to 2¾ per cent. and so give the full subsidy. But this seems a difficult and complicated way of doing it when it would have been simpler to grant the full rate of tax relief to all borrowers.
It is certainly high time that the Government brought in the new Clause. But I regret that they should have done so at this late stage and in this way. We spent weeks in Committee on the Bill, and if the Government did not think of this provision when they introduced the Bill, then surely it should have been brought in during the Committee stage when we could have dealt with it satisfactorily. Now we have to deal with it


among 41 pages of new Clauses and Amendments. This is an unsatisfactory procedure but at least it is a step in the right direction.

Mr. Martin Maddan: New Clause 17 is exceedingly important. We are at a late stage in the Bill and I hope that the Minister will be forthcoming in reply on this subject, because there is really no further opportunity for the House to do anything more about it.
There are areas of the country, including my constituency, both in the Borough of Hove and in the urban district of Portslade, where, to all intents and purposes, no building land is left for further council house development. Possibly the only way for a family to get a house is such areas is through a mortgage scheme in order to purchase one.
The sort of families the Labour Party purports to represent—I do not think that it does—are reliant in such areas upon a good, fair and flexible mortgage scheme and, if necessary, a mortgage option scheme. But the one we have is so inflexible that it puts them at a great disadvantage and, indeed, the whole area at a disadvantage compared with other parts of the country where council house provision is going ahead at a substantial rate.
Perhaps, Mr. Deputy Speaker, I can seek guidance from you about a matter which concerns me. When the Bill was presented, the Explanatory and Financial Memorandum said on page XIII that the total consequent public expenditure would be approaching £40 million by 1972–73. It went on to say that this expenditure would be contained within a total of public investment in housing at about the level explained in the White Paper.
When a Minister comes to the House with a new Clause on Report involving substantial public expenditure, is it in order, and if it is, is it usual, for him to do so without explanation of the cost to public funds? I am not an expert on Erskine May, but I remember being told by a senior Member of the House when I came here many years ago—he may have been wrong, or I may have misunderstood—that it was an obligation, and one which applied to me when I was

promoting a Private Member's Bill, that, if a substantial amount of public funds was at issue, there should be attached a Financial Memorandum explaining what that cost would be.
If a new Clause is introduced at a late stage of a Bill like this, does the procedure exonerate the Government or the promoter of a Private Member's Bill from making any financial explanation to the House? If so, it suggests an unsatisfactory aspect of our procedure and stultifies the efforts of hon. Members in their prime duty of trying to see that public funds are controlled. I do not know whether it is even in order to raise a point of order during one's own speech.

Mr. Deputy Speaker (Mr. Harry Gourlay): The hon. Gentleman's remarks do not really amount to a point of order. The Bill is normally reprinted after Standing Committee but the Financial Memorandum is not.

5.45 p.m.

Mr. Maddan: This emphasises an unsatisfactory state of affairs in that we should have a Bill back from Standing Committee without a Financial Memorandum. When the Government adopt the device of sticking in a new Clause at this late stage, the House is not given the information which it would have been given had the provision been contained in the Bill originally or in a separate Bill. That is what I am protesting against. I thought that the hon. Member for Orpington (Mr. Lubbock), who raised this point, rather unusually let the Government off lightly.

Mr. Deputy Speaker: I can assist the hon. Gentleman by reminding him that the House has passed a Money Resolution in connection with the Bill and that there was an opportunity for hon. Members then to ascertain additional costs which might be involved.

Mr. Maddan: But I did not know at the time that this new Clause was coming. That is the whole point. We open the stable door for a horse of a certain size and colour to pass through, but, having opened it, we find a herd of ponies galloping behind the horse as it comes out. I wonder whether the Chair can do anything to enable the House properly to fulfil its traditional duty.

Mr. Deputy Speaker: There is nothing that the Chair can do to assist the hon. Gentleman in his dilemma at the moment other than to advise him that he can pursue the matter with the Minister in debate.

Mr. Maddan: I thank you, Mr. Deputy Speaker. I will pursue this matter with the Minister and I hope, in the light of the exchanges I have just had with you—and you have been very helpful—that we shall be given proper information.

Mr. Oscar Murton: My hon. Friend the Member for Hemel Hempstead. (Mr. Allason) gave the House an interesting historical summary, going back to 1965, of what the Conservative Party intended to do about this problem and how the Government stole its clothes. It enables me to go back to my own favourite quotation—a statement made by the Prime Minister as Leader of the Opposition in 1963, when he said:
By intelligent monetary policies, Labour will bring mortgages within the reach of young couples living on average incomes.
I do not know about intelligent monetary policies in the wider context, but I do not suggest that that was an accurate statement or a promise that has been kept. But, at last, after long delay, new Clause I has been brought forward in a rather irrelevant manner and at the very last moment. It occurred to those of us who served on the Standing Committee which considered the Housing Subsidies Bill that there would be certain difficulties in having such a rigid system.
It is true to say that although few people have availed themselves of the mortgage option scheme the benefits available under the scheme have tapered off virtually to nothing, principally because of a combination of the increased interest rates since April, 1968, and also the no less vital problem of rising house prices.
I also wish to ask the Minister when something will be done to implement the Clause. The right hon. Gentleman has said that it is subject to the Treasury, and I understand what he said. But the sands are running out. If public confidence is to be maintained, or indeed retained, in the mortgage option scheme something will have to be done quickly to make it a more than worth-while enterprise.
I am astonished that, the Government having taken the opportunity to rephrase the new Clause and to introduce it in this slightly irrelevant manner, nothing has been done to enable anybody who opts to join the scheme at least to have one chance of changing his mind in the light of his subsequent circumstances.
On other occasions the Minister has said that it will be administratively difficult for building societies to implement such an arrangement. Undoubtedly a problem is involved. Building societies are hard working and do not always have the staff they would wish to have, and the scheme by its nature is to some extent complicated. But since the Minister has introduced a Clause of this nature, surely he should have attempted to provide for the possibility that at least once during the life of a mortgage—or, as we would prefer, it at more frequent intervals according to interest rates—a person who has joined the scheme should be given the opportunity to leave it.
My hon. Friend the Member for North Fylde (Mr. Clegg), who is a professional man, said that one of his most difficult duties was in advising his clients whether or not they should opt for this scheme. How much worse is it for somebody like myself, who is extremely unprofessional in that respect, when students come to me with a similar problem. I advise them to go to their solicitors to find out what they should do. When I have listened to the problems which they put to me, with my limited knowledge of the subject, I wonder whether their solicitor will be able to help them.
The circumstances of young and newly married people can easily change. It is likely that they will quickly obtain a much better job, but, on the other hand, they may suffer the misfortune of some accident or illness which might slow up their progress. It is, therefore, wrong that a man should have to saddle himself with something for 15, 20, or 25 years without any possibility of changing his mind.
The 100 per cent. mortgage is needed by people with little capital, whereas the option mortgage scheme is needed by people with low earnings. The two categories are not necessarily the same. Both sides of the House wish to see help given to young married couples and to council tenants. They are the people


who need 100 per cent. mortgages. Because of low earnings, they are unable to take part in the option mortgage scheme. Our new Clause seeks to break the link between the two schemes. Could the Minister give us some indication of the costs involved in the scheme, and say when he expects to introduce the provisions of new Clause 1?

Mr. Paul Hawkins: I do not intend to go into who first thought of this scheme. I do not mind either way. I should like to see the option mortgage scheme go well and become more popular than it has been in the past. I was a little astonished to hear mention of the middle band. I wondered whether I had wandered into an agricultural debate, in which we speak about pig middle bands, and so on. I welcome the new Clause, but I feel that it is rigid. All our Amendments and new Clauses are designed to make the scheme far more popular and to bring into the scheme more people than are coming in at present.
I have heard mention of a figure of 6 per cent. as representing those who are taking part in the scheme. I do not know whether that is a static figure, or whether people are entering the scheme at present. I am an estate agent and I am told by my staff that very few people are coming into the scheme at present. There is great difficulty in advising people properly on these matters. It is difficult to tell what will be the future income or circumstances of a young married couple. If they could be told that with a change in circumstances they could opt out of the scheme, it would give them a great deal of encouragement.
From my business experience I can back up the point made by my hon. Friend the Member for North Fylde (Mr. Clegg) that it is practically impossible to give honest accurate advice. The Member of Parliament who is a solicitor, or a land agent, or an insurance broker is in an almost worse position. Constituents who might also be clients expect a good deal of free advice, but often one cannot give accurate advice.
It is necessary to try to set a date, and I hope that the Minister will be able to give an assurance about when the

provisions will come into operation. It will be encouraging to many people if they are given that information. People are looking for houses, and those who are thinking of getting married will know that these improvements will be brought in from a certain date. There will be a hold-up on other parts of the Bill if a scheme has to be approved in the months preceding the time when improvements come into effect. I hope that a date will be given for the scheme as soon as possible.
I welcome the option mortgage scheme. I believe that it is a good scheme. There are not nearly enough people in it. I feel that it should be considered as a starter scheme for people who hope to have a better income in five or 10 years' time, and who wish to start as house-owners, since they see how house prices are going, and then wish to come to a decision about their future as they see their way forwards. This is one way forward for people with small incomes. The purpose of new Clause No. 17 is to make it possible, at certain intervals, for people to get out of the scheme when financial circumstances warrant it.
From my personal experience, I believe that the scheme could be much better and could be used by many more people. I hope that the Minister will think carefully about our Amendments and new Clauses which, if accepted would greatly improve the Bill and the scheme.

6.0 p.m.

Sir Douglas Glover: When one of my colleagues—in this case my hon. Friend the Member for Hove (Mr. Maddan)—makes a slight error, it is better that it should be put right by one of his hon. Friends than by the Minister. There was a Money Resolution on the Order Paper today, otherwise this debate would, I presume, be out of order. To that extent, this sloppy Government are in order. That is about the only compliment that I wish to pay them.
I have a great deal of sympathy with the Minister about the new Clause. I sympathise with anybody who takes over a Department from the Secretary of State for Social Services, because he is bound to find the whole place in uproar. I suspect that the object of not putting a date in the new Clause as to when


it becomes operative is to cause some embarrassment to my hon. Friend the Member for Worcester (Mr. Peter Walker) when he succeeds to the Minister's office. Unless the Minister is prepared to accept our Amendments, and particularly the one which proposes to insert a date, I do not think that the new Clause is of much value. Perhaps the Minister will instruct the Parliamentary Secretary to say that he will give us a firm date.
A Parliament which is working within a tight monetary control should know what the new Clause would cost. How can we possibly know what a new Clause will cost when there is no percentage figure in it? Presumably the Minister, in tabling the Clause, even at this eleventh hour of the eleventh day of the eleventh month, gave some thought to this point. The Opposition have not been given much chance to work out their sums and to discover what it would cost. Presumably the Minister had some idea of what he intended to insert in an Order, if he brings an Order before the House, to put the Clause into operation.
I hope that the Parliamentary Secretary will say that, on the present level of interest, it is visualised that the option percentage will go up to 2¾ per cent. or to 3 per cent. and that the Government expect to bring this into operation, not 12 months from now, but as soon as the Bill receives the Royal Assent. If that is so, there is no reason why it should not be stated in the Clause.
The Clause is pure whitewash unless the Minister accepts our Amendments, particularly (b) and (c). I should like to know what the result would be of accepting Amendment (d). I gather from what the hon. Member for Hemel Hempstead (Mr. Allason) said that the figure of 4 per cent. would give the option mortgagee an advantage over the person paying the full rate of tax.

Mr. Lubbock: What is wrong with that?

Sir D. Glover: I do not say that there is anything wrong with it, but as the scheme was based on a percentage below it I did not think that the Minister intended it to be above it. What percentage has the Minister in mind? Or is this merely whitewash?
If the Minister intends to have an option mortgage scheme which is flexible and, therefore, adjustable as interest rates go up or down, something on the lines suggested in new Clause 17 needs to be done. If the building societies are prepared to operate something like new Clause No. 1 by which they may alter their rates every six or 12 months, there will not be very much more administrative costs for them to allow a chop off and to permit someone to come out of the scheme if their financial circumstances have changed.
I hope that the Minister realises that new Clause No. 17 is part and parcel of the deal proposed in new Clause No. 1. The two go together. If the building societies believe that they can work new Clause No. 1, with all its implications—and there are many implications for the building societies in it—it would not involve much more administrative work for them if they provide a chop-off under new Clause 17 when somebody wishes to change from the scheme to the ordinary system. I hope that the Minister will see the sense of what my hon. Friend the Member for Worcester said and will ask the building societies to consider new Clause No. 17, because they have the idea completely wrong. There should be a time limit. It would probably be right to give them one bite of the cherry after five years, at which time, if their income had increased and it would pay them to do so, they could transfer to the ordinary system.
Were I a solicitor I should have difficulty in advising people which system to adopt. It is perhaps as well that I am not a solicitor, since I might give bad advice to people buying houses. I could recommend only those people who were about 50 years of age to take the option mortgage scheme, since, if their income by that time were not sufficient to attract the standard rate of taxation, it would not be likely to do so in the future, and it would be safe for them to opt for the option mortgage scheme for the rest of their lives.
That could not be said to a young couple who were getting married. One cannot say to a young couple of 25 that when they had decided which scheme to adopt they may not change it throughout the life of the mortgage. It is, therefore, necessary to have a chopper Clause, such as new Clause 17.
This is a depressing debate. We are talking about the problems of young people trying to set up a home and having to pay an interest rate of 8½ per cent. on a mortgage. Increasingly, people cannot undertake the responsibility of buying their homes, and this is under a Government who came in, if not pledged, to bring down the interest rate for mortgages to 3 per cent., conveyed that attitude of mind to a great mass of people.
There is no doubt that many hon. Gentlemen would not today be sitting on the other side of the House were it not for the widely held belief that the right hon. Gentleman's party would ensure that houses could be bought at a cheap rate of interest. Let it for ever stick in their gullets that this is yet another promise which they have failed to implement. This debate is for the purpose of trying to relieve the effects of the broken promises of a discredited Government.

6.15 p.m.

Mr. Rossi: I support my right hon. and hon. Friends on new Clause 17, which gives the right to people who have committed themselves to the mortgage option scheme to opt out if they wish to do so.
It is generally agreed and recognised that the mortgage option scheme has not been the unqualified success that it was hoped it would be. It has not given help to people with low incomes who are seeking to buy their own homes, and has, indeed, lamentably failed. The percentage of people who have taken up this scheme in comparison with the total number of people who have obtained mortgages since the scheme came into operation shows that it is extremely unpopular.
It is unpopular for two reasons. First, people committed to the scheme are committed to it for as long as their mortgage lasts, and they are obliged, when making the election whether or not to opt for the scheme, to try to forecast what their future financial position is likely to be for 15 to 20 years ahead. It is impossible for a young married couple to face life on the pessimistic assumption that for the next 15 or 20 years they will never be in the position of having to pay tax at the standard rate because their income is so low.
Young people starting life together look forward to a successful and happy future and, with that mentality, they are unlikely to choose a scheme which presupposes that their income will never rise above a low level. For this reason it has been extremely hard to persuade people that this scheme is appropriate for them.
On the other hand, had there been the opportunity, once their income increased and the scheme ceased to be of benefit to them, for them to pull out of the scheme, it would have been much more popular, much more successful and would have done a great deal of good.
The second reason why the scheme has latterly not been successful is that people who have entered into the scheme have considered that they have been swindled by the Government. This happened last year with the increase in family allowances. People receiving family allowances were taken above the level at which the standard rate of tax becomes payable and, having been given money by the Government they found that they were losing the benefit which they had previously enjoyed under the mortgage option scheme. They were prejudiced, since, being in the mortgage option scheme, they were not entitled to the reliefs enjoyed by standard rate taxpayers who had not gone into the scheme.
Because of the hesitancy of young people to forecast a pessimistic financial future, and because people who had entered the scheme found that they were being swindled, the scheme has been grinding lamentably to a halt. One can, therefore, understand why the Government wish to introduce the new Clause to alleviate some difficulties that have arisen. But not all the difficulties are alleviated, and the scope of the new Clause is very limited. The effect of the new Clause is to admit to the country that the Government's housing policy has lamentably failed.
We have already discussed the way in which interest rates have risen since 1964 because of Government action. New Clause 1 is introduced party to alleviate the hardships caused to people with low incomes who are buying houses. It gives them a modicum of assistance in meeting rising interest charges.
I find it a little disturbing that the new Clause, instead of providing for a fixed level of relief on interest charges such as


the 2 per cent. mentioned in the previous legislation, now leaves the Minister in his discretion to alter the levels of relief under the mortgage option scheme, so that adjustments can be made on the 2 per cent. interest rate as and when the Minister wishes. The Minister seems to be presupposing that there is no ceiling to interest rates on mortgages. Where will it end? We are 8½ per cent. today—

Mr. Clegg: Did my hon. Friend see an article in the Building Societies Gazette which asked: "Is this to be the 10 per cent. year?"?

Mr. Rossi: I am grateful to my hon. Friend.
I was about to say that if one borrows from a local authority one has to pay 9⅛ per cent. Building societies are beginning to wonder whether it will be 10 per cent. this year, and I wonder whether 10 per cent. will be the final ceiling. From the way new Clause 1 is presented, with this complete discretion on the part of the Minister to adjust this 2 per cent. whenever he wants, it seems to indicate that there is a fear in his mind that there is no ceiling. Am I right in saying that it is a fear? Perhaps it is the Government's intention that money shall become dearer and dearer and they are getting in early with new Clause 1 to give a certain amount of relief against what they intend shall happen to our future borrowings?
I would like the Parliamentary Secretary, when he replies, to deal with this question of mortgage interest rates. Perhaps he can tell us whether new Clause 1 is framed in this way for that reason—because the Government believe that there is no ceiling to mortgage interest rates. If there is a ceiling perhaps he will be kind enough to tell us what it is. The general fear at the moment is that this continual creep upwards will not cease, certainly in the lifetime of the Labour Government. This is one of the reasons why the country wants to see the Government go, because everyone knows that this creep will not end until they do.

Mr. Speaker: Order. The hon. Gentleman is a little wide of the new Clause.

Mr. Rossi: I had finished my remarks on that point. I hope that the Parliamentary Secretary will be able to answer some of the matters I have raised.
The Minister said that one of the important effects of the mortgage option scheme would be to encourage the building of new houses because it would create a demand for houses of a certain kind and people in those houses would want better houses. They would know that a market existed for their present house and would be able to go about buying a new home, thus creating a demand which would be filled by the developers. A little while ago he said that housing starts were poor in the first quarter of this year because of extremely bad weather. I would have thought that as soon as the bad weather ended, coupled with the promises of better deals over interest rates, as envisaged in new Clause 1, there would have been a tremendous upsurge in starts this April. My hon. Friends will not be surprised to know that starts for April were 1,000 down on the number of starts made in April last year.

Mr. Speaker: Order. With respect we are debating not the Housing Bill, but some specific new Clauses.

Mr. Rossi: For this reason I am urging that the Government reconsider new Clauses 17 and 18, because these improvements to new Clause 1 will make the mortgage option scheme much more attractive. Unless it is made attractive, it will not work. All that we are doing in new Clause 1 is alleviating some of the hardship which is being suffered by those already in the scheme. When they entered it mortgage rates were about 6½ per cent. Now they have risen to 8½ per cent., the relief that they are getting is meaningless. That situation is being mitigated by new Clause 1, but it does not encourage fresh people to enter the scheme, it does not make the scheme successful, which is what the Minister is aiming at.
My hon. Friend the Member for Hemel Hempstead (Mr. Allason) said that the original mortgage option scheme came from this side of the House, and that hon. Gentlemen opposite stole our clothes while we were bathing at a conference. They tried to tailor that clothing to themselves and they made a poor sartorial job, because they do not fit anyone. I urge the Minister, if he is really concerned to have a mortgage option scheme that will be clear and worth while to those whom he is seeking to encourage to buy


houses, those at the lower end of the income bracket, but who have hopes of rising financially, seriously to consider new Clause 17. It is not impractical. I am sure that the building societies could operate it if he took the trouble to consult them and tried to work out a scheme with them.

Mr. Graham Page: In moving the new Clause the Minister did little more than explain what was written on the Notice Paper. During the debate, and as a result of the Amendments and new Clauses which we have tabled, it must have been perfectly clear to the Minister and his hon. Friends what sort of points were troubling us, what sort of difficulties we found in accepting new Clause 1 without some of our Amendments. I would have hoped that as those difficulties became abundantly clear, the Parliamentary Secretary might have caught your eye, Mr. Speaker, and tried to intervene to tell us what would happen. He will only have himself to blame if, during his winding-up speech, we seek to interrupt him to find out a little more.
All that I can do is to repeat, without tedious repetition I hope, the difficulties put by my hon. Friends. Looking at this and other new Clauses on the Notice Paper tabled by the Government and at some of the Amendments which we have already added to the Bill, I have come to think of this Bill not as the Housing Bill, but as the Housing (Miscellaneous Repentances) Bill. So many mistakes of the Government are being brought forward for correction—and not full correction at that, merely meagre attempts to correct errors, not going the whole way and correcting them properly.
This is an example of a situation when pressure from the Opposition, in debate, at Question Time and throughout the country has resulted in the Government being forced to surrender. I am not sure whether the surrender was genuine, or whether it was merely found to be a useful announcement to make in a housing debate we had a few days ago, when the Government were in difficulties and wanted to throw out something to the Press. In fact, they are not doing anything about it at the moment. They are not correcting the anomalies and the dissatisfaction with the option mortgage scheme. This is not

an unconditional surrender to the pressure that we brought, and it has taken a long time to get even as far as this.
6.30 p.m.
Even now, there is not an amendment of the law. There is merely power being taken to amend it at some time in the future. We have had no indication from the Minister as to when it will happen. He is taking the powers. The only indication that he has given is that he will use them as soon as practicable. That was his answer to a Parliamentary Question recently. That is a nice way of escaping responsibility.
Having the new Clause on the Notice Paper only at this stage, we are threatened that there are further discussions going on and there may be further Amendments in another place. We may be left with the final Clause to go into the Bill and be able to discuss it only when we consider Lords Amendments. That is not the right way to treat the House on legislation of this importance on a point which is not new. It was put before the public as long ago as 1965 by my right hon. and hon. Friends. The proposition for option mortgages could have been brought into operation as early as 1966. Certainly, it could have been brought into operation in a proper form in the Housing Subsidies Act, 1967.
To see where the defects are, perhaps I might recollect the purpose of the option mortgage. It was that mortgage interest can be deducted from taxable income. However, if a person has not full taxable income from which to deduct it, he does not get any benefit from the deduction. If the mortgagor is not liable to tax or pays at less than the standard rate, he does not benefit from the deduction, and he is given as the equivalent of that benefit a 2 per cent. reduction in the interest that he is called upon to pay. Since that 2 per cent. was fixed in the Housing Subsidies Act, 1967, interest rates have risen by 2 per cent., and so he is back to square one.
The right hon. Gentleman said that, according to his figures, they had risen from 6¾ per cent. to 8½ per cent. When the Housing Subsidies Bill was introduced, the figure was 6½ per cent., and the increase has been a full 2 per cent., which was supposed to be the benefit that the mortgagor would get if he was not


a standard rate taxpayer. In this Bill, the Government are trying to put that right and put the mortgagor back to where they hoped he was in 1967.
We are asking what is the rate of interest to be substituted for that 2 per cent., and when. When are we to learn the rate, and when is it to come into operation? When does the Minister intend to make an Order, and from what date does he intend to make it operational?
I have referred to the 2 per cent. increase in mortgage interest rates, and a probing Amendment has been tabled to try to discover what rate of interest the Minister has in mind. It seemed a rough and ready calculation to say that, if the interest rate has gone up by 2 per cent., it has nullified the original 2 per cent. benefit, so the 2 per cent. must be doubled and called 4 per cent.
My hon. Friend the Member for Hemel Hempstead (Mr. Allason) gave some carefully calculated figures which have given the Minister a very good lead as to what the percentage should be. My hon. Friend said that, to put the mortgagor right for this year, the Order should be to increase the 2 per cent. to 3½ per cent., and then, from April 1970, the mortgagor would be back in his position of benefit if the rates were increased by 2¾ per cent.
What are to be the figures? I do not think that the Minister should say in this vague way, "I want an Order to make whatever percentage I think fit". That may be all right for the future. We do not know how mortgage interest rates will fluctuate in the future, but, at present, we have a definite increase from the originally concentrated 6½ per cent. to 8½ per cent. What will the Minister do about this factual circumstance at the present time? We are happy to give him the power to adjust this in future as interest rates may change, but we want to know what is to be the figure now.
Many of my hon. Friends asked when the Order would be made and from what date it would operate. Is it to be retrospective for those who have suffered already? It is essential that we should have a firm undertaking from the Government that they will bring in the Order at least before the end of the year. That is giving a long time for further negotiations

and for the Bill to be put through, and I think that we are being very ungenerous to mortgagors in letting the Government have such a long time in which to make up their mind. But at least they should make up their mind before the end of the year and bring in the Order by then. If they intend to assure us that they will bring in the Order before the end of the year, let it be stated in the Bill so that it becomes law when the Bill receives the Royal Assent.
Those are our points on the amount of interest which is to be stated in the Order and the date when the Order shall come in.
Amendment (e) is to leave out paragraph (c) of the new Clause. That paragraph seeks to give the Minister the power to juggle with the interest rates. Taking a simple example from the present rate of interest, he would be entitled to say, "The recommended Building Societies' Association rate at the moment is 8½ per cent., but I do not think that building societies ought to be charging that. I say that it should be 6½ per cent., and you will have your 2 per cent. knocked off that fictitious rate".
I am highly suspicious of giving the Minister power to do that. It seems to me to be coming very close to dictating to building societies that they shall charge only a certain rate of interest decided by the Government. I am aware that that is the policy adopted in the United States for American building societies, but I am sure that neither the Government nor my right hon. and hon. Friends would like building societies here to conduct their business as American building societies do.
They are apt to give advances with Green Shield stamps, and all sorts of benefits like that, and their advertising is very vulgar. That may be the way that Government-controlled American building societies are run, but I do not want to see that sort of system operated here. It really means leaving the building societies to a commercial decision on what is the right interest to charge to borrowers so as to attract in the money that borrowers want, and not having them dictated to by the Minister.
New Clause 17 deals with the option out of the option mortgage scheme. This is necessary because there is dissatisfaction with the scheme as it now stands in


three respects. This dissatisfaction is brought about first by Government action on taxation. Several of my hon. Friends have mentioned that the recent family allowance increase put the calculations of mortgagors out altogether. Many of them found they were quite wrong and, in fact, were losing by having entered the scheme. Yet they could not get out of it without paying off the mortgage and taking out another one; and there are many building societies who do not grant remortgages, so that it would be impossible to put the matter right in that way.
The second dissatisfaction with the scheme is the rate of interest which building societies are obliged to charge now. The increase in the rate of interest has deprived the non-standard taxpayer mortgagor of the benefit he would have had. The third dissatisfaction arises out of the fact that the mortgagor himself may increase his income. Surely, this is the whole point of the option mortgage. It is there to assist young married couples to buy houses. These are just the people whose incomes will increase fairly quickly. If the man is any good at all in his job he will hope to get an increase in his wage or salary over the coming years. He cannot judge at that stage whether the increase will take him above the scale on taxation; and if he is successful in getting a big enough increase he finds that he is unsuccessful and has failed in choosing the option mortgage. He really must be given the chance to opt out. The Government are at, the moment, I understand, supporting a Private Member's Bill to opt out of marriage, but they are refusing us the right to opt out of a mortgage.
In the past, we have perhaps put forward this scheme in a rather vague way, saying the mortgagor really ought to be allowed to get in and out of a mortgage. We have put new Clause 17 on and Notice Paper in a very definite form, a form which is acceptable to the building societies. Computerisation will be no obstruction to this. Most building societies are now on or about to go on to computer, but the change in data at a specific time would not create any difficulty in carrying out this operation. In fact, new Clause 1 would be far more difficult to carry out by the building societies than would our proposals in new Clause 17.
I suppose that I ought to declare an interest, Mr. Speaker, but I am at the moment wearing my building society tie so perhaps the Minister will recognise that I am a director of a building society and am speaking with some knowledge of how a building society can and will operate. In this respect, I could not agree with my hon. Friend the Member for North Fylde (Mr. Clegg), who suggested a regional variation. I believe that we should find it rather too difficult to operate that, but I am sure that there will be no insuperable difficulty in working the fixed period of option. It needs careful administration, but it could be worked.
In new Clause 18 we are suggesting, by a simple little Amendment—one can realise what it is about only by the title of the Clause—the unlinking of the 100 per cent. mortgage from the option scheme. As one of my hon. Friends, I believe the Member for Poole (Mr. Murton), has said, there is this distinction between the option scheme and the 100 per cent. mortgage. The option scheme is of advantage to the person who has little income. The 100 per cent. mortgage is of advantage to the person who has little capital. Very frequently they are not the same person, so this really should be unlinked. Section 30 of the Housing Subsidies Act, 1967, does not mention 100 per cent. mortgages at all. It merely speaks of mortgages of a greater amount than would normally be granted.
As matters are operating at the moment I want to pay a very sincere tribute to the insurance companies who are issuing the mortgage guarantee policies. These are operating extremely well up to 95 per cent. For a comparatively small premium the insurance company guarantees the advance above 75 per cent. so that building societies can advance 95 per cent. and feel that their investors' money is guaranteed for that 20 per cent. between 75 and 95 per cent. By this great help by the insurance companies over the past year or two literally many thousands of young married couples have been able to get houses where they would not have been able to do so otherwise. I pay that tribute to the insurance companies for their assistance with those mortgage guarantee policies.
But this is no credit to the Government, because this has been done quite outside


Section 30 of the Housing Subsidies Act, 1967. It could have gone up to 100 per cent. had that section been unlinked from option mortgages; and in certain cases there are borrowers who are prohibited from buying their houses by that small 5 per cent. of deposit, because of their heavy expenses in other fields like furnishing the house, moving, and so on.
I am not one of those who believe that the default in mortgages increases if there is an advance of 95 or 100 per cent.; and again I speak from experience of studying the defaults week by week in a building society. I can assure the House that only very infrequently does a 95 per cent. borrower default. Practically nine out of 10 of the defaulters on any building society list are those who wish to take advantage of inflation and remortgage their house. Strangely enough, they are the people who default, but it does not follow that if a building society lends 95 or 100 per cent., provided that it is within the person's means to pay the instalments, one gets defaulting in that way.
A person is not irresponsible just because he has borrowed all the money to buy his house. In some cases it makes people far more responsible. It makes them feel a responsibility towards the person who has enabled them to get into their house in that way. But with the unlinking of the 100 per cent. mortgage from the option mortgage there will be quite a number of cases where the difference between the 95 per cent. which the insurance companies and building societies are operating at the moment and the 100 per cent. would be of very great benefit. This is not a political matter. It is not of any very great expense to the Government. I do not believe that this would cost the Exchequer one penny. It would be very extraordinary if the Government had to come to the assistance of the insurance companies to make this operate. This is a simple Amendment which ought to be accepted at once.
This afternoon the Opposition have been proved right in what we said about the option mortgage scheme—that it was failing, that it was flagging, that it did not have all the popularity it ought to have. We are gratified that the Government have seen that our arguments were

correct, but we are sorry that they have not gone all the way to make the scheme popular. We ask them to believe not only that we were right in saying that the scheme was flagging, but that we were right in saying how it could be put right. We are being generous to the Government this afternoon: we are offering them a grain of popularity, and probably a bit more than a grain, if only they will accept the Amendments and our new Clauses.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): The hon. Member for Ormskirk (Sir D. Glover), with that great penetration he has of being able to size up a debate without patiently listening to every word of it, came into the Chamber and said that it had been an extremely depressing debate. I think that that was because there had been a succession of speeches from Opposition Members all bewailing their coldness because we had stolen their clothes, all saying that what we were doing was most important and necessary, and yet, at the same time, trying to think of Amendments upon which, with good consciences, they could have Divisions.
The scheme has not been a failure. The take-up rate has remained fairly steady at 10 per cent. Nor has the rising rate of interest substantially diminished the amount of the loans. The amount of money going into the building societies has increased and the number of applications for mortgages has increased. It is too early to say whether this is a permanent change, and I do not want to be complacent about it but there is no doubt that that is the present situation.
Hon. Members on both sides of the House have fairly said that those who will be hit most are those with moderate incomes, those who do not get the advantage of tax relief. This is all common ground. The Government have, therefore, taken this chance as quickly as they could to introduce the Clause. I sympathise with those who say that it is a large amount to swallow on Report, but it would have been irresponsible to do what the hon. Member for Worcester (Mr. Peter Walker) suggested and produce an ad hoc Bill, because the time devoted to such a Bill could well have meant that it could not be brought into operation.

Mr. Peter Walker: What stopped the Government from bringing in a Bill in, say, February or March, so that it would have been on the Statute Book by now?

Mr. MacColl: As the hon. Gentleman well knows, parliamentary time is short and we have to make sure that we use it to the best effect. This opportunity was available to us. We have not tried to duck it, as was hinted. We have wanted to make this change and we took this opportunity to do so.
The form it has taken is that it is an authority to my right hon. Friend to lay an Order—a series of Orders, because this will not be a once-for-all operation—adjusting the 2 per cent. to the changes in the rates of interest. It takes that form because it would be unwise in a Bill to make a completely firm provision and to try to anticipate movements of rates of interest. The sensible way is to take powers, and that is what we are doing.
My right hon. Friend cannot anticipate when he will get these powers, because he does not know when the Bill will be passed, but as soon as he has them he intends to finish negotiations with the building societies, finish his consultations, get the Order into suitable form and lay it before the House. That will be the commitment of expenditure. There is nothing in the new Clause as such which causes expenditure. The expenditure will come when the Order is made.
I have been asked about the cost. I make my purely personal estimate, for we do not know what is to come, but in the first year the cost will be about £1 million and in a full year about £2½ million to £3 million. But that depends on rates of interest and on tax changes and we cannot be certain about those.
It was suggested that we should have a fixed date. This was a weakness of the 1967 legislation, for once it had been laid down in a Statute the date could not be altered. I do not believe that hon. Members opposite pressed us to do so at the time, but it might have been as well to put these powers outside that Statute. It is desirable to have flexibility to prepare Orders and my right hon. Friend intends to do so as quickly as he can—this is not in any sense a delaying action. There would be no point in using the date of the end of the year. It

is possible that we shall not have the Bill by then, although I hope that hon. Members opposite will co-operate to ensure that we do.

Mr. Graham Page: Assuming that the parliamentary timetable will allow the Bill to receive the Royal Assent by the end of July, will the Parliamentary Secretary give us an assurance that the Order will be ready for publication on the date of the Royal Assent? This would not be unusual; it has been done with many Bills.

Mr. MacColl: The difficulty about doing that is the importance of consulting the lending agencies. There is no point in producing an Order which they regard as unworkable and not meeting their needs. The whole point of doing it this way is that we shall be able to discuss it with them and produce something which meets their difficulties. My right hon. Friend would hope to have it as soon as possible, but it would be unwise of him to bind himself to any date.
The Amendment to subsection (4)(c) of the new Clause suggests that we are trying to juggle with interest rates. That is not the point. We are trying to make certain that we know what the representative rate of interest is so that we can consider the current rates of interest being negotiated by lending agencies and not only the rate of interest which may go up. We do not want to have a two-tier system with one rate for the option mortgagor and one for mortgagors with ordinary contracts with building societies. This is a permissive provision and it may not be necessary to implement it, but it is a valuable and desirable safeguard of public money.
7.0 p.m.
The difficulty with new Clause 17 is that though we would welcome an extension of opting in and opting out—no point of great principle is involved—the lending agencies have said, and continue to say, that they find it impossible to do this without a great increase in costs. The building societies, which get criticised on account of administrative costs, are understandably rather sensitive about this matter.
The draft of the 1967 Measure was absolutely rigid, and we tried, as we had


undertaken, between the Committee stage and Report, to do something about it. All we were able to achieve was a hardship Clause which enabled someone suffering hardship to opt into the scheme, but not to opt out of it. We will certainly see whether there is a way round this difficulty. My right hon. Friend has not just looked at the matter in order to get an excuse. We want a solution, and we will keep in touch with the building societies.
Many hon. Members have told us about their professional experience. The hon. Member for Orpington (Mr. Lubbock) is a distinguished engineer, but I sometimes find to my own discomfort that I am more attracted to his political opinions that I am to his technical knowledge. I thought that he was wrong in his remarks about computers. In my experience of them as a consumer, I find that they tend to be extremely rigid. Once they have a programme, they are very reluctant to change it. I doubt whether this picture of being able to dash the figures off on the computer altogether fits the facts, or will resolve the problem. However, if there is a possibility of getting it done in that way, my right hon. Friend will be very glad to consider it.

Mr. Julius Silverman: Can my hon. Friend give any estimate of the number of transfers from option mortgages to ordinary mortgages or from ordinary mortgages to option mortgages that are likely to take place?

Mr. MacColl: It would be very difficult to do so. The numbers will obviously depend on tax changes and changes in earnings. It would be a difficult projection to make, but we will explore the possibility in our discussions.
I do not want to sound indifferent to the seriousness of the problem, but hon. Members have talked a great deal about the need to encourage the young mortgagor and the importance, therefore, of his having an option to leave the scheme when his circumstances improve. It is interesting to see how short the average period of a mortgage is. The average mortage lasts for about 10 or 15 years, and not for the full 25.

Mr. Clegg: The Parliamentary Secretary is quite right in saying that the

average period is short. That is so in certain areas, but in the North people tend to stay in houses for much longer. In the South, there is more movement.

Mr. MacColl: They are a restless lot in the South, I know.
The real point is that this option is very valuable for the first house purchase. It often happens that when people find themselves established in their careers and in the district in which they will stay for the rest of their lives they want to move to another house, but have the advantage of not needing the option in that case. This is not as serious a problem as the debate might have implied.
There is no difference between us on the subject of the guarantee. We ought to concentrate our resources on the people who have the lowest means. The option mortgage is a test of whether people need help, and it is those people whom one wants to assist with the guarantee. I believe that this view is taken by the insurance organisations. People who do not get any benefit from the mortgage are not so much in need of the guarantee. They can negotiate their own arrangements with an insurance agency.

Mr. Graham Page: Will the Parliamentary Secretary bear in mind the family of which the bread-winner is aged about 30 or 35 years? He has got to the peak of his work and has a steady wage from then on, but he has not been able to save any capital to put down as a deposit. He gets no help here at all. Young people are thought of, and so are the old people, the pensioners, but the man of about 30 or 35 who has not been able to save is the man whom we should like to help with the 100 per cent. mortgage.

Mr. MacColl: That is an important case, but I do not think that it is as essential to help that person as it is the option mortgagor.
There is no question here of the Opposition being able to say that they wanted to do this, but that we have "pinched" their clothes. It is something which the last Government categorically and explicitly refused to do. Hon. Members have been reminiscing—the hon. Member for Crosby did not do so, although he was wearing his old building society tie


—about the dear old days of the Standing Committee on the earlier Measure, but I remind them of how they excelled themselves in mocking us for saying then exactly what they are saying now.
They said "This is just a Socialist stunt. They will not do it. They will get power to make the Order, but will never actually make the Order." That is just what they have been saying today—that we have no intention of making the Order. But we made that Order at the earliest possible date. That is an indication of my right hon. Friend's sincerity, and of his intention to exercise

as quickly as he can the powers given by the new Clause.

Question put and agreed to.

Clause read a Second time.

Amendment proposed to the proposed Clause: In line 4, leave out 'May' and insert:
'shall before 31st December 1969.'—[Mr. Peter Walker.]

Question put, That the Amendment be made:—

The House divided: Ayes 77, Noes 142.

Division No. 230.]
AYES
[7.9 p.m.


Allason, James (Hemel Hempstead)
Goodhart, Philip
Nott, John


Astor, John
Goodhew, Victor
Osborn, John (Hallam)


Atkins, Humphrey (M't'n &amp; M'd'n)
Grieve, Percy
Page, Graham (Crosby)


Bessell, Peter
Griffiths, Eldon (Bury St. Edmunds)
Pardoe, John


Biggs-Davison, John
Gurden, Harold
Pym, Francis


Boardman, Tom (Leicester, S. W.)
Hall, John (Wycombe)
Renton, Rt. Hn. Sir David


Body, Richard
Hawkins, Paul
Ridley, Hn. Nicholas


Boyd-Carpenter, Rt. Hn. John
Heald, Rt. Hn. Sir Lionel
Rossi, Hugh (Hornsey)


Brewis, John
Hill, J. E. B.
Russell, Sir Ronald


Brinton, Sir Tatton
Holland, Philip
Sharples, Richard


Brown, Sir Edward (Bath)
Hunt, John
Silvester, Frederick


Bullus, Sir Eric
Hutchison, Michael Clark
Taylor, Sir Charles (Eastbourne)


Campbell, B. (Oldham, W.)
Irvine, Bryant Godman (Rye)
Taylor, Frank (Moss Side)


Carlisle, Mark
Kaberry, Sir Donald
Thatcher, Mrs. Margaret


Carr, Rt. Hn. Robert
Kershaw, Anthony
Vaughan-Morgan, Rt. Hn. Sir John


Clegg, Walter
Kirk, Peter
Walker, Peter (Worcester)


Cordle, John
Knight, Mrs. Jill
Walker-Smith, Rt. Hn. Sir Derek


Costain, A. P.
Legge-Bourke, Sir Harry
Walters, Dennis


Crowder, F. P.
Lubbock, Eric
Weatherill, Bernard


Davidson, James (Aberdeenshire, W.)
McNair-Wilson, Michael
Whitelaw, Rt. Hn. William


Dean, Paul
McNair-Wilson, Patrick (New Forest)
Wiggin, A. W.


Doughty, Charles
Maddan, Martin
Wilson, Geoffrey (Truro)


Drayson, G. B.
Maxwell-Hyslop, R. J.
Worsley, Marcus


Errington, Sir Eric
Maydon, Lt.-Cmdr. S. L. C.



Eyre, Reginald
Mills, Stratton (Belfast, N.)
TELLERS FOR THE AYES:


Fortescue, Tim
Morgan-Giles, Rear-Adm.
Mr. Anthony Grant and


Glover, Sir Douglas
Murton, Oscar
Mr. Timothy Kitson.




NOES


Allaun, Frank (Salford, E.)
Dobson, Ray
Hattersley, Roy


Alldritt, Walter
Dunn, James A.
Hooley, Frank


Anderson, Donald
Dunwoody, Mrs. Gwyneth (Exeter)
Houghton, Rt. Hn. Douglas


Archer, Peter
Dunwoody, Dr. John (F'th &amp; C'b'e)
Howie, W.


Atkinson, Norman (Tottenham)
Eadie, Alex
Hoy, James


Bidwell, Sydney
Edelman, Maurice
Huckfield, Leslie


Bishop, E. S.
Edwards, Robert (Bilston)
Hughes, Hector (Aberdeen, N.)


Blackburn, F.
Edwards, William (Merioneth)
Hunter, Adam


Blenkinsop, Arthur
Ellis, John
Hynd, John


Booth, Albert
Evans, Ioan L. (Birm'h'm, Yardley)
Jackson, Peter M. (High Peak)


Boston, Terence
Finch, Harold
Janner, Sir Barnett


Bottomley, Rt. Hn. Arthur
Fitch, Alan (Wigan)
Jay, Rt. Hn. Douglas


Boyden, James
Fitt, Gerard (Belfast, W.)
Johnson, Carol (Lewisham, S.)


Broughton, Dr. A. D. D.
Fletcher, Rt. Hn. Sir Eric (Islington, E.)
Johnson, James (K'ston-on-Hull, W).




Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)


Brown, R. w. (Shoreditch &amp; F'bury)
Fowler, Gerry
Kelley, Richard


Buchan, Norman
Fraser, John (Norwood)
Kerr, Mrs. Anne (R'ter &amp; Chatham)


Butler, Herbert (Hackney, C.)
Freeson, Reginald
Kerr, Russell (Feltham)


Butler, Mrs. Joyce (Wood Green)
Gardner, Tony
Lawson, George


Carmichael, Neil
Gray, Dr. Hugh (Yarmouth)
Leadbitter, Ted


Carter-Jones, Lewis
Greenwood, Rt. Hn. Anthony
Lee, John (Reading)


Corbet, Mrs. Freda
Gregory, Arnold
Lestor, Miss Joan


Crawshaw, Richard
Grey, Charles (Durham)
Lewis, Arthur (W. Ham, N.)


Davies, Ednyfed Hudson (Conway)
Griffiths, Eddie (Brightside)
Lyons, Edward (Bradford, E.)


Davies, Dr. Ernest (Stratford)
Hamilton, William Fife, W.)
Mabon, Dr. J. Dickson


de Freitas, Rt. Hn. Sir Geoffrey
Hannan, William
McBride, Neil


Delargy, Hugh
Harper, Joseph
McCann, John


Dempsey, James
Harrison, Walter (Wakefield)
MacColl, James




Macdonald, A. H.
Moyle, Roland
Rowlands, E.


McKay, Mrs. Margaret
Murray, Albert
Ryan, John


Mackintosh, John P.
Newens, Stan
Shore, Rt. Hn. Peter (Stepney)


Maclennan, Robert
Noel-Baker, Rt. Hn. Philip
Silkin, Rt. Hn. S. C. (Dulwich)


McMillan, Tom (Glasgow, C.)
Norwood, Christopher
Silverman, Julius


McNamara, J. Kevin
Oakes, Gordon
Skeffington, Arthur


MacPherson, Malcolm
Orbach, Maurice
Steele, Thomas (Dunbartonshire, W.)


Mallalieu, E. L. (Brigg)
Oswald, Thomas
Thomas, Rt. Hn. George


Mallalieu, J. P. W. (Huddersfield, E.)
Owen, Will (Morpeth)
Tinn, James


Manuel, Archie
Palmer, Arthur
Tuck, Raphael


Marks, Kenneth
Pannell, Rt. Hn. Charles
Wallace, George


Marsh, Rt. Hn. Richard
Parkyn, Brian (Bedford)
Weitzman, David


Mason, Rt. Hn. Roy
Pavitt, Laurence
Wellbeloved, James


Mayhew, Christopher
Peart, Rt. Hn. Fred
Wells, William (Walsall, N.)


Mellish, Rt. Hn. Robert
Perry, George H. (Nottingham, S.)
Witlock, William


Mendelson, John
Prentice, Rt. Hn. R. E.
Williams, Alan Lee (Hornchurch)


Mikardo, Ian
Price, Christopher (Perry Barr)
Winnick, David


Millan, Bruce
Robertson, John (Paisley)



Molloy, William
Robinson, Rt. Hn. Kenneth (St. P'c'as)
TELLERS FOR THE NOES:


Morgan, Elyttan (Cardiganshire)
Rodgers, William (Stockton)
Dr. M. S. Miller and


Morris, Alfred (Wythenshawe)
Rogers, George (Kensington, N.)
Mr. Ernest G. Perry.


Morris, Charles R. (Openshaw)

Amendment proposed to the proposed Clause: In line 17, leave out paragraph (c).—[Mr. Peter Walker.]

Question put, That the Amendment be made:

The House divided: Ayes 77, Noes 146.

Division No. 231.]
AYES
[7.17 p.m.


Allason, James (Hemel Hempstead)
Grant, Anthony
Nott, John


Astor, John
Grieve, Percy
Osborn, John (Hallam)


Biggs-Davison, John
Griffiths, Eldon (Bury St. Edmunds)
Page, Graham (Crosby)


Boardman, Tom (Leicester, S. W.)
Gurden, Harold
Pym, Francis


Body, Richard
Hall, John (Wycombe)
Renton, Rt. Hn. Sir David


Boyd-Carpenter, Rt. Hn. John
Hawkins, Paul
Ridley, Hn. Nicholas


Brewis, John
Heald, Rt. Hn. Sir Lionel
Rossi, Hugh (Hornsey)


Brinton, Sir Tatton
Hill, J. E. B.
Russell, Sir Ronald


Brown, Sir Edward (Bath)
Holland, Philip
Sharples, Richard


Bullus, Sir Eric
Hornby, Richard
Silvester, Frederick


Campbell, B. (Oldham, W.)
Hunt, John
Taylor, Sir Charles (Eastbourne)


Carlisle, Mark
Hutchison, Michael Clark
Taylor, Frank (Moss Side)


Carr, Rt. Hn. Robert
Irvine, Bryant Godman (Rye)
Thatcher, Mrs. Margaret


Clegg, Walter
Kaberry, Sir Donald
Turton, Rt. Hn. R. H.


Cordle John
Kershaw, Anthony
Vaughan-Morgan, Rt. Hn. Sir John


Costain, A. P.
Kirk, Peter
Walker, Peter (Worcester)


Crowder, F. P.
Kitson, Timothy
Walker-Smith, Rt. Hn. Sir Derek


Dean, Paul
Knight, Mrs. Jill
Walters, Dennis


Dodds-Parker, Douglas
Legge-Bourke, Sir Harry
Whitelaw, Rt. Hn. William


Doughty, Charles
McNair-Wilson, Michael
Wiggin, A. W.


Drayson, G. B.
McNair-Wilson, Patrick (New Forest)
Wilson, Geoffrey (Truro)


Errington, Sir Eric
Maddan, Martin
Worsley, Marcus


Eyre, Reginald
Maxwell-Hyslop R. J.
Wright, Esmond


Fortescue, Tim
Maydon, Lt.-Cmdr, S. L. C.



Glover, Sir Douglas
Mills, Stratton (Belfast, N.)
TELLERS FOR THE AYES:


Goodhart, Philip
Morgan-Giles, Rear-Adm.
Mr. Bernard Weatherill and


Goodhew, Victor
Morton, Oscar
Mr. Humphrey Atkins.




NOES


Allaun, Frank (Salford E.)
Corbet, Mrs. Freda
Fowler, Gerry


Alldritt, Walter
Crawshaw, Richard
Fraser, John (Norwood)


Anderson, Donald
Davidson, James (Aberdeenshire, W.)
Freeson, Reginald


Archer, Peter
Davies, Dr. Ernest (Stretford)
Gardner, Tony


Atkinson, Norman (Tottenham)
de Freitas, Rt. Hn. Sir Geoffrey
Gray, Dr. Hugh (Yarmouth)


Bessell, Peter
Delargy, Hugh
Greenwood, Rt. Hn. Anthony


Bidwell, Sydney
Dempsey, James
Gregory, Arnold


Bishop, E. S.
Dobson, Ray
Crey, Charles (Durham)


Blackburn, F.
Dunn, James A.
Griffiths, Eddie (Brightside)


Blenkinsop, Arthur
Dunwoody, Mrs. Gwyneth (Exeter)
Hamilton, William (Fife, W.)


Booth, Albert
Dunwoody, Dr. John (F'th &amp; C'b'e)
Harman, William


Boston, Terence
Eadie, Alex
Harper, Joseph


Bottomley, Rt. Hn. John
Edelman, Maurice
Harrison, Walter (Wakefield)


Boy den, James
Edwards, Robert (Bilston)
Hatterstey, Roy


Broughton, Dr. A. D. D.
Edwards, William (Merioneth)
Hooley, Frank


Brown, R. W. (Shoreditch &amp; F'bury)
Ellis, John
Houghton, Rt. Hn. Douglas


Buchan, Norman
Evans, Ioan L. (Birm'h'm, Yardley)
Howie, W.


Butler, Herbert (Hackney, C.)
Finch, Harold
Hoy, James


Butler, Mrs. Joyce (Wood Green)
Fitch, Alan (Wigan)
Huckfield, Leslie


Carmichael, Neil
Fitt, Gerard (Belfast, W.)
Hughes, Hector (Aberdeen, N.)


Cartor-Jones, Lewis
Fletcher, Rt. Hn. Sir Eric (Islington, E.)
Hunter, Adam




Hynd, John
Mallalieu, E. L. (Brigg)
Pavitt, Laurence


Jackson, Peter M. (High Peak)
Mallalieu, J. P. W. (Huddersfield, E.)
Peart, Rt. Hn. Fred


Janner, Sir Barnett
Manuel, Archie
Perry, George H. (Nottingham, S.)


Jay, Rt. Hn. Douglas
Marks, Kenneth
Prentice, Rt. Hn. R. E.


Johnson, Carol (Lewisham, S.)
Marquand, David
Price, Christopher (Perry Barr)


Johnson, James (K'ston-on-Hull, W.)
Marsh, Rt. Hn. Richard
Robertson John (Paisley)


Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Mason, Rt. Hn. Roy
Robinson, Rt. Hn. Kenneth (St. P'c'as)


Kelley, Richard
Mayhew, Christopher
Rodgers, William (Stockton)


Kerr, Mrs. Anne (R'ter &amp; Chatham)
Mellish, Rt. Hn. Robert
Rogers, George (Kensington, N.)


Kerr, Russell (Feltham)
Mendelson, John
Rowlands, E.


Lawson, George
Mikardo, Ian
Ryan, John


Leadbitter, Ted
Millan, Bruce
Shore, Rt. Hn. Peter (Stepney)


Lee, John (Reading)
Mottoy, William
Silkin, Hn. S. C. (Dulwich)


Lestor, Mist Joan
Morgan, Elystan (Cardiganshire)
Silverman, Julius


Lewis, Arthur (W. Ham, N.)
Morris, Alfred (Wythenshawe)
Skeffington, Arthur


Lubbock, Eric
Morris, Charles R. (Openshaw)
Steele, Thomas (Dunbartonshire, W.)


Lyon, Alexander W. (York)
Moyle, Roland
Thomas, Rt. Hn. George


Lyons, Edward (Bradford, E.)
Murray, Albert
Tinn, James


Mabon, Dr. J. Dickson
Newens, Stan
Tuck, Raphael


McBride, Neil
Noel-Baker, Rt. Hn. Philip
Wallace, George


McCann, John
Norwood, Christopher
Weitzman, David


MacColl, James
Orbach, Maurice
Wells, William (Walsall, N.)


Macdorcald, A. H.
Oswald, Thomas
Whitlock, William


McKay, Mrs. Margaret
Owen, Will (Morpeth)
Williams, Alan Lee (Hornchurch)


Mackintosh, John P.
Page, Derek (King's Lynn)
Winnick, David


Maclennan, Robert
Palmer, Arthur



McMillan, Tom (Glasgow, C.)
Pannell, Rt. Hn. Charles
TELLERS FOR THE NOES:


McNamara, J. Kevin
Pardoe, John
Mr. Ernest G. Perry and


MacPherson, Malcolm
Parkyn, Brian (Bedford)
Dr. M. S. Miller.

Clause added to the Bill.

New Clause 2

PRICE PAYABLE ON ENFRANCHISEMENT OF LEASEHOLD HOUSE

The Leasehold Reform Act, 1967 shall have effect, and be deemed always to have had effect, as if in section 9(1) (which provides for the price to be paid by a tenant on an enfranchisement under the Act to be calculated on certain assumptions, by reference to a sale of the reversion in the open market by a willing seller) there had been inserted after the words a willing seller' the words '(with the tenant not buying or seeking to buy)':

Provided that this section shall not have effect where the price has been determined (by agreement or otherwise) before the passing of this Act.—[Mr. George Thomas.]

Brought up, and read the First time.

The Secretary of State for Wales (Mr. George Thomas): I beg to move, That the Clause be read a Second time.

Mr. Speaker: I have suggested that with the new Clause we debate Amendment (a), in line 1, at beginning insert (1). and Amendment (b), in line 8, at end insert:
(2) The Minister shall, for the purpose of clarification and the removal of doubt, have power by order to modify section 9(1) aforesaid by describing to what extent (if at all) the assumptions stated in the said subsection include assumptions as to the annual percentage decrease in the value of money by inflation, the taxation element in the valuation of a deferred interest, the existence of members or the tenants' family as possible successors or as

prospective buyers, the number of years' purchase and the rate of interest applicable thereto in the calculation of the capital value of a ground rent, the number of years and the rate of interest applicable in the calculation of the deferred value from the modern site value, the development potential of the property and the landlord's rights required by the said subsection to be taken into account.

Mr. Thomas: Leasehold is an emotive term to a great many of my right hon. and hon. Friends, and certainly to our people in Wales, and to the people of Birmingham and London, too, but I am the last person to want to stir up emotions in the House. The hon. Member for Crosby (Mr. Graham Page) told me last week that he welcomed the announcement that we were to put down this new Clause. It is really a corrective Clause which will be welcomed by one million householders in the country, for it removes the misunderstanding which has existed ever since the Custins decision by the Lands Tribunal, where it appeared that the Tribunal had taken into account in assessing the price of the freehold the fact that market value must be shared between the ground landlord and the tenant. We now take the tenant, the leaseholder, out of the market. He is not considered to be a bidder in the open market, and I believe that the sooner this gets to the Statute Book the better.

Sir Derek Walker-Smith: The right hon. Gentleman referred to the new Clause as resulting


from a misunderstanding. That seems to be a tactful and delicate word. I should have thought it was more accurate to say that the necessity for this Clause is a further sorry but increasingly familiar instance of Government incompetence. It shows clearly that there has been either a failure of the Government to come originally to a clear conclusion as to their intention, or a failure to communicate it clearly, because the House is splendidly served by Parliamentary draftsmen and counsel and if the matter is communicated clearly to them they get it right. The fact that the right hon. Gentleman now says that it was not right is clear evidence that the Government failed to communicate it correctly, assuming that they themselves ever arrived at a clear and unequivocal conclusion.
7.30 p.m.
There is therefore a failure on one or other at least of those counts, although possibly on both. Section 9 of the Leasehold Act fixed the price payable for the freehold or leasehold enfranchisement as an open market price subject to two main assumptions, first, that the freehold was subject to the existing tenancy, and secondly, that the existing tenancy is extended for 50 years at a modern ground rent. Those assumptions are written quite clearly into Section 9.
It is a rule of law and construction that where in a Statute or a contract certain matters are expressly stated, then there is a presumption against implying further matters which could equally well have been expressed but have not in fact been expressed. Applying that principle, it was clearly not possible to imply into Section 9 of the Leasehold Act a further assumption beyond the specified assumptions to the effect that the words "open market" in Section 9 mean not what they say, that is to say that the generality of purchasers includes the sitting tenant, but that they mean what they do not say, that is a market limited by the notional exclusion of the sitting tenant.
That is the principle of construction, and it was clearly properly applied by the Lands Tribunal in the case of Custins v. Hearts of Oak Benefit Society, where the tribunal had the advantage of having as its president Sir Michael Rowe, an old

and valued friend of mine—and probably of other hon. and learned Gentlemen—and a well-respected forensic opponent of former days. The Tribunal found:
… we cannot escape from the conclusion that if Parliament meant to exclude the sitting tenant it could and would have said so in clear terms. The required assumption of an extended lease quite clearly enables a sitting tenant to buy much more cheaply than he could have done without the Act. If it had been intended to go further and eliminate the tenant from the market we think the assumptions in sub-paragraph (a) could and would have been quite different.
The Government now come here to say that this is not what they meant and say that when they said in Section 9 "market value" what they really meant was something less than market value. When they said in Section 1 "a right to acquire on fair terms" they meant on something less than fair terms. At any rate that is the conclusion to which the Lands Tribunal came. In its decision it said:
In our view, the expression willing seller' means no more than that the vendor cannot expect more than the market price on the sale on the statutory terms because he might be thought to be selling with reluctance; but there is no reason why he should sell below the market price. We note too that Section 1(1) of the Act requires that the acquisition should be 'on fair terms' and we do not think that the exclusion of the tenant would result in a 'fair terms' sale, because a price which was calculated on a basis which ignored the price which a tenant would be prepared to pay would not be on 'fair terms'. We have therefore come to the conclusion that the sitting tenant should not be excluded from the market.
The Lands Tribunal certainly came to a correct conclusion in construing the law in that decision. Now the Government are puffing and panting in pursuit of difficulties of their own making. I doubt whether we ought to debate now the merits of leasehold enfranchisement at the capitalisation of site value, but I have three comments to make within the framework of that principle.
Assuming that the principle of the landlord being compensated at the value of site only is a just principle—and that is debateable—then one element of that value is the fact that the tenant exists in the open market to make a higher bid. There seems to be no reason, at any rate in logic, why that should be discounted. The second point is that the effect of the decision of the Tribunal in my view has clearly been exaggerated. If one looks at the cases, the Hearts


of Oak case and the other case, the differences between the two valuations referred to the Tribunal arise more out of differences in valuation technique and detail than from this principle of law.
It is not easy to see why the tenant's over-bid should make very much practical difference. After all, the sitting tenant will only offer very slightly more than the market price. He will just offer sufficient more by way of over-bid to beat the market. That is a very slight increase and the sort of figures that have been bandied about, of a 50 per cent. escalation, are wholly beside the point. My third comment is that this new Clause will cause injustice in the operations of the time factor. As I understand it, what is proposed is that from the date of the Royal Assent tenants will pay on the lower scale of market value, reduced by the elimination of the tenant's over-bid, but until then they will pay on the higher basis which the Lands Tribunal has found that the 1967 Act meant and intended.
Therefore, there will be this arbitrary difference between the two categories, based as far as I can see on no more solid or satisfactory ground than the incompetence of the Government in failing to get the matter in accordance with their present view when they formulated the 1967 Act. It is difficult to see that this new Clause represents anything other than a pattern of muddled intention and bungled execution. Quite apart from the broader questions of the principle by which leasehold enfranchisement should be valued it seems to be a condemnation of the efficiency of the Government through the legislation which they present to the House.

Mr. S. C. Silkin: I would like to begin by congratulating the Government most sincerely and heartily on acceding most promptly to the representations made by hon. Members representing leasehold constituencies on this side of the House and also to the representations made by hon. and right hon. Members on this side who have much experience in these matters.
I will not follow the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) through the decision in the Custins case. That decision has never been appealed; it may be right or wrong as a matter of law.

I am not concerned with that, but with the fact that the effect of the decision is to break a principle enshrined in the White Paper, namely, that the bricks and mortar belongs to the lessee and the land belongs to the lessor.
It is quite evident, whatever way one construes the Custins decision, that some part at least, possibly a substantial part of the bricks and mortar value, must be enshrined in the merger element which the Lands Tribunal in Custins case decided should be a part of the compensation payable to the lessor.
Secondly, and here I touch upon a point raised by the right hon. and learned Member, it seemed that one of the mischiefs of the decision in the Custins case, and I pay full tribute to the President and members of that Tribunal, was the fact that is has stirred up considerable doubt as to what the compensation should be. It has left a large gap in the form of this merger element which enables any tribunal to have a wide discretion, not governed by any clear principles, between the highest and the lowest possible figure for compensation. For that reason, as well as the conflict with the White Paper, it seems most important that this matter should be clarified by the removal of the marriage element altogether.
The right hon. and learned Gentleman said that the decision was a correct one and referred to the methods of interpretation of which any court must make use. I quite agree that it may well be on those methods of interpretation the decision may have been a correct one, but I am certain that if the Tribunal had been enabled by the law relating to construction of Statutes to have regard to the provisions of the White Paper and what was said in this House, it would certainly have come to a very different decision. The decision it came to was obviously one taken on a balance of considerations.
It is all very well for the right hon. and learned Gentleman to criticise the Government for what he described as a failure in drafting, but throughout the whole proceedings in this House, in debates in Committee and on Report, when we have the benefit of the presence of eminent lawyers such as the right hon. and learned Gentleman, the hon. Member for Crosby (Mr. Graham Page) and others, not one hon. Member was under the impression that the compensation


would include the factor which the Lands Tribunal decided it ought to include on the interpretation of the Custins case.

Sir D. Walker-Smith: I was not a member of the Committee on the Bill.

Mr. Silkin: I was speaking about both the Committee and the Report stage. I was a member of the Committee, where we had great assistance from the hon. Member for Crosby and other hon. Members. No one thought for a moment that the Custins decision would do something to anticipate any future legislation.

Mr. Reginald Eyre: The Report stage on that Bill, as also on the Bill dealing with the Land Commission, was taken in the early hours of the morning. These Clauses were dealt with by only very brief introductions by the Minister.

Mr. Silkin: I must protest. Hon. and right hon. Members had every opportunity of observing this point and putting it right, but not one of us was able to anticipate it. I do not blame any hon. Member for that, but it is a fact and the Government cannot be blamed any more than the rest of us can be.
While I congratulate the Government on the basic principle of what they are doing, which will be much appreciated in constituencies such as mine with a large leasehold element in them, I am not wholly satisfied with the existing wording. It seems most important that we should not a second time leave a loophole, the first time being an inadvertent one. It seems that the position is that when one calculates the price payable in accordance with the terms of Section 9 of the 1967 Act one has to presuppose that there is a hypothetical sale in the open market.
As I see it, the significance of the Custins decision is not merely that there is a possibility that the tenant may be the purchaser, but also and perhaps more significant there is the possibility that the purchaser will say that the sitting tenant at some time in future may wish to buy the freehold and, if so, he will pay an enhanced, price for it simply because he wants the security of the bricks and mortar. Therefore, that hypothetical purchaser in the open market will pay more and the vendor will ask more because of the possibility that the lessee may want

to buy. By merely confining the Amendment to the possibility of the tenant seeking to buy, one is not dealing with the whole problem. One ought also to deal with the problem of the purchaser having in mind that in future the tenant may wish to buy the freehold reversion.
The Amendment in the names of the hon. Member for Crosby and others raises the useful point that the same possibility might arise as a result of other persons with an interest, such as members of a tenant's family having the same kind of interest. This is a very difficult matter to draft. I have tried and I have reached my twelfth draft which I should be glad to hand to my right hon. Friend in case it would help him. This matter might be looked at again and perhaps in another place a form of words could be devised which would avoid any possibility of another Custins case and the need for further amendment. I congratulate the Government on taking this extremely prompt action, which will be appreciated by all leaseholders.

7.45 p.m.

Mr. Rossi: I do not wish to congratulate the Government on bringing in this Clause—not that I do not think it should be on the Statute Book—but there is no congratulation to be given to the Government for having to bring it forward at this date, so long after the original Act was put on the Statute Book.
It is no good the hon. and learned Member for Dulwich (Mr. S. C. Silkin) saying that there was no criticism of Clause 9 when we were in Committee. Allow me to refresh his memory. I have the full OFFICIAL REPORT Of the Committee on the Leasehold Reform Bill with me. Certainly, I and a number of my hon. Friends pointed out clearly on 27th April, 1967, that unless Clause 9 was radically amended it would cause a great deal of trouble and uncertainty.
If the hon. and learned Gentleman wishes to have the reference, he will find it in column 408 onwards of the OFFICIAL REPORT for 27th April, 1967. He will find there in remarks I made—which I shall not weary the House with again nor have the impertinence to read the speech I then made, which lasted for three-quarters of an hour—dealing precisely with the kind of difficulties we would get into over Clause 9.
I said that if we left the Bill as it was drafted we would create a great deal of


uncertainty. Certainly, no layman would be able by looking at the Act to work out what a freehold would cost him before he served his notice. I asserted that it would be necessary for him to get professional advice to try to understand the meaning of that Clause, and even when he got it it would be very doubtful whether he would be much the wiser.
I made direct reference to Parry's Tables because the Parliamentary Secretary, in that debate, suggested that it would be very simple to work out the effect of Clause 9. He suggested that all that valuers would have to do would be to get Parry's Tables and run their fingers down the line of figures, then out would come the price. I suggested that he could not find valuers who would agree to give in any one case what the value of a particular freehold would be.

Mr. S. C. Silkin: Mr. S. C. Silkin rose—

Mr. Rossi: I will not give way. I did not interrupt the hon. and learned Member, although I was tempted to do so, as I was irritated by the remarks he made and his allegation that we failed to challenge this in Committee. I wish to continue my speech.
On that occasion I went on to give an example of the way in which it was possible for valuers to vary so differently in their views, by referring to a High Court case which went to the Court of Appeal and then to an official referee, where several of the eminent valuers in London were concerned. There was a difference in price between £70,000, on the one side, and £100,000, on the other—a difference of £30,000 on one property.
The Parliamentary Secretary will remember that even after the Act had been passed I was in considerable correspondence with him and his Department, saying that Section 9 was not working, precisely for the reasons I mentioned in the Committee, that it was uncertain and incapable of clear interpretation. I wrote to him with an example of a case in which, under the Section, there was a variation between valuers, as between a freeholder and a leaseholder, of £1,500, on one side, and £5,000, on the other. I asked then, within months of the Measure being enacted, that he should introduce legislation to correct Section 9. He told me in reply that he was sorry,

but this must now be a matter of interpretation for the courts.
We have all seen the way in which the Lands Tribunal has interpreted the language the Government chose to use, against the advice of hon. Members on this side. This is not a matter for congratulation. When we are told that thousands upon thousands of leaseholders will now be delighted, I suggest to hon. Members opposite that they consider the uncertainty and anxieties that they have created in the minds of leaseholders up to now because they would not accept our advice.
Our arguments were not purely negative. We did not simply say that the Clause would not work, that it was vague and would cause difficulties, and that laymen and valuers alike would not be able to understand it. We said all that, but we also said a bit more. We tabled two Amendments setting out an alternative method of valuation—

Sir Barnett Janner: On a point of order. Is the hon. Gentleman really dealing with the Amendment? He is talking about valuations, but he is not directing his remarks to the one question about valuations with which we are now dealing. He is talking about an entirely different subject, as he knows very well.

Mr. Rossi: I am sorry if the hon. Gentleman does not like my argument. He was not supposed to.

Mr. Deputy Speaker (Mr. Sydney Irving): Order. I think that the hon. Gentleman is seeking to illustrate his point. He is going rather wide of the Amendment, but I shall allow him to continue.

Mr. Graham Page: The Amendment deals with the valuation of leaseholds. I thought that my hon. Friend was sticking strictly to the point, in discussing that valuation. He had been accused by the hon. and learned Member for Dulwich (Mr. S. C. Silkin) of not having raised the matter in Committee, and he is entitled to answer that accusation.

Mr. Deputy Speaker: Order. I have not ruled the hon. Gentleman out of order. It will be better if the debate continues and I am allowed to determine whether the hon. Gentleman continues to be in order.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): I would be grateful if the hon. Gentleman could show which of the Amendments, which I do not recall, went to the issue of the marriage of the interests, which is the substance of the Amendment.

Mr. Rossi: The hon. Gentleman well knows that the Amendments were based on an entirely different principle, which he accepted at the time. They were based on equity and would have worked fairly if he could have conceived an administratively convenient way of introducing the principle.
The debate ranged purely on such matters of detail. Each of the administrative obstacles the hon. Gentleman set In the way of that very simple proposition was dealt with and answered fully, and at the end of the debate it became quite clear that the minds of Ministers and hon. Members opposite were shut tight. They were not prepared to be receptive of new ideas. They were obsessed with their principle and fondly believed that their wording would carry the principle into effect. We told them that it would not, and time has proved this.
If they had not been blinded by their own bias in the matter and were prepared to act equitably between the freeholder and the leaseholder they would have listened a little more carefully to what we were then proposing, and they would not be in the present mess. Our proposal was that essentially the interest of a freeholder in a house let on a long lease is purely that of investment. What one must do is to find where one can the price the freeholder originally paid for his interest. In most cases this is possible. One then multiplies it by the extent to which money has depreciated since he paid his money. In that way he would get his money back in tax, and the leaseholder would pay a fair price for his property, paying the immediate investment value.
This principle was accepted as equitable and fair. We were congratulated then by hon. Members opposite for striving hard to find a formula that would be equitable. But because they were so obsessed by their own ideas and were determined to press forward with them, and could not see the difficulties in the

way of implementing them, they would not listen to any alternative.
Therefore, they are not to be congratulated. They are to be condemned for their pig-headedness, stubbornness and inability to understand what they are doing when they are legislating. That is the beginning and end of the whole lamentable history of the new Clause.

Sir B. Janner: I listened with considerable interest to the hon. Member for Hornsey (Mr. Rossi). He is a lawyer, and I suppose that, like me, he has a considerable number of cases of this kind to deal with daily. I was trying to see how he managed to evade the point at issue. The same criticism applies to his right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith).
We are dealing with an element in the assessment, not with the manner in which various surveyors come to a conclusion on the values. We are here concerned with the fact that the interest or bidding of the sitting tenant must have an effect on the value, however the value is arrived at. We all know that different surveyors have different views as to the assessment that should be made in other respects. I interrupted the hon. Gentleman because I could not understand how he was talking about the point.
8.0 p.m.
The question is whether it was ever intended that the sitting tenant should be one of those entitled to be taken into consideration when a bid was made for the freehold of the property. That is the beginning and end of it. Of course, this is difficult. Laymen realise perhaps even more than lawyers that no Act of Parliament is so perfect that its intention is not disputed in the courts time and again. The Government, in this case, are already seeking a method whereby Parliament's intention shall be taken into consideration in arriving at a decision. Yet the hon. Member for Hornsey (Mr. Rossi) has the effrontery to attack the Government over their action in this complicated matter, which has been made the more complicated because of the attitude of the Opposition.

Mr. Graham Page: I do not recall that the hon. Member for Leicester, North-West (Sir B. Janner) was a member of


the Standing Committee. Nor do I recollect his studying constructive Amendments put forward from this side in Committee or on Report.

Sir B. Janner: I have watched this process very closely and I have dealt with leasehold matters for 30 years and more. The hon. Gentleman, who is a lawyer, knows that what his colleagues have been saying is sheer nonsense. Let them ask those of my hon. Friends who are from South Wales what people thought they would have to pay for the ground rent. It was never contemplated that they would have to pay the sums of money at issue here.
People whose families have been living in the house for 99 years thought that the freehold would automatically come to them on payment of a certain number of years' purchase price of the ground rent which they had been paying throughout that time. To say that the Act ever intended that the tenant should be taken into consideration in assessing the amount he himself would have to pay is sheer nonsense.
It has transpired that a tribunal has interpreted the Act in that way, however. What have the Government done? They have acted immediately. The Opposition cannot complain that the Government are guilty of delay. This Clause is intended to make the situation clear as was originally intended under the Act.
I would like to say something about the assessment of the amount that has to be paid but that is irrelevant at present. I do not recall an Amendment from this side or from the other on the question of whether the sitting tenant should have to be taken into consideration in the assessment. We all agree on this subject, so what is the difficulty? Instead of taking their present attitude, the Opposition should be on their knees and thanking the Government for bringing in something to clarify a situation which we both intended to be clear.

Mr. Maddan: It would be a pity if the debate were confined to lawyers and Welshmen. Since I am neither, I thought that I would intervene. The hon. and learned Member for Dulwich (Mr. S. C. Silkin) has told us that he thinks the new Clause also will give rise to difficulty

in interpretation. I wonder whether the basis on which the Government have been dealing with the problem of leasehold is the right one.
I want to animadvert to a principle, much contested by the hon. and learned Gentleman, which I put forward in a certain context during various stages of the passage of the Leasehold Reform Act. It is that, if measures are to be taken to relieve a leaseholder, at the time his leasehold comes to an end, of having to pay for the bricks and mortar he has already paid for, there is a much better principle on which it could be done. It has been practised in Letchworth, the first garden city, for virtually the whole of this century so far.
There, when a lease comes to an end or is renewed, it is done on the basis of the site value only, clear of all bricks and mortar on it. That deals simply with the problem which the Government have been trying to deal with and which hon. Members representing Wales have been concerned about. Indeed, hon. Members from Birmingham, London and elsewhere have some sympathy with them. The root of the trouble in which we find ourselves is that, in deciding to tackle this problem, the Government opted for the wrong solution.

Mr. E. Rowlands: I am sorry that the hon. Member for Hornsey (Mr. Rossi) has disappeared, because I wanted to take him up on some of the fundamental points he tried to make. In Committee, we had so-called "constructive" Amendments from the Opposition—constructively aimed to increase the amount that the leaseholder would have to pay. They reckon that the valuation we thought we had written into the Act was nothing less than legal confiscation and that the prices would be too low. Let us be clear about this. What the hon. Member for Hornsey and others were proposing would have increased substantially the prices to the leaseholder. That is the simple construction that one can put on their proposals.
I do not recall that the question of tenants' overbid came into discussion in Committee. I am sure that, if the hon. Gentleman had had such evidence, he would have brought it up. I accept the criticism that there are ambiguities and anomalies in the Act and there is no


better explanation for this Clause than that given by Sir Michael Roe:
Alas, both Houses of Parliament underestimated the ingenuity of lawyers and surveyors.
That is why the new Clause has been brought forward.
This should be put not only in the context of the two Tribunal cases, but in the context of what has happened since the Act was passed, particularly in South Wales. The great landlords gathered with their valuers to decide that, on no account, would they be reasonable, although one or two were. It was expected that, under the Act; a price would be offered by the landlord, reasonable negotiation would follow and in most cases an amicable settlement would be reached.
That has not happened. The direct opposite happened instead. Landlords put in exorbitant prices, using fanciful methods of valuation which many of the profession have had to disown and discount. They said to the leaseholder, "We will not negotiate or even suggest a price." There things have stood. The leaseholders were put into a difficult position when they were told that they could take the matter to the Lands Tribunal, because they could be faced with high legal costs. That was stage one.
Stage two was to take a couple of test cases to the Lands Tribunal. Hon. Members opposite praised the decision of the Tribunal as if it were a remarkable piece of logic and a careful, thoughtful valuation of the whole situation. But the Tribunal confused the issue even further. That is why the new Clause has been brought forward.
The Financial Times dealt with this matter on 16th January. It said that in assessing the final stage of the valuation the Tribunal cut the rate of interest from 8 per cent. to 6¼ per cent. to allow for the tenant's over-bid and then reduced it to 4 per cent. The newspaper article said:
This somewhat cryptic and esoteric last adjustment has baffled many experts …".
Certainly, many valuers are baffled by the Lands Tribunal decision. I welcome the speed and urgency with which the Government have brought forward this new Clause to help leaseholders who are in a state of confusion.
I should like to ask one or two questions about the new Clause. Hon. Members opposite are suggesting that a definite rate percentage should be fixed so that a clearer and simpler system of valuation can emerge. Could my hon. Friend the Parliamentary Secretary spell out more clearly the system of valuation which will emerge with the Clause? Valuers should be given a clear idea of the situation in advising leaseholders who are faced with exorbitant demands. Could he also say a word about the inflationary theory? The two test cases appear to have discounted the inflationary theory, but there is no harm in the Government going on record that it is not a responsible and reasonable basis of valuation in terms of this legislation or any other.
If there is to be a reasonable basis of valuation in order to work out the prices of freeholds, appeals ought not necessarily to go before the Lands Tribunal. The Tribunal is not a people's court. It is an expensive tribunal for individuals to go to. The fundamental quarrel between leaseholder and landlord will turn on the valuation of sites. This could be determined by the local valuation tribunal or even by the county court, but certainly not by the Lands Tribunal, which in no sense is a people's court.

Mr. S. C. Silkin: My hon. Friend may be aware that in the Custins case the members of the Lands Tribunal in dealing with a matter involving a few hundred pounds visited a large number of comparable properties in North London. To visit properties in South Wales or in Newcastle they would need to travel long distances, at very great expense.

8.15 p.m.

Mr. Rowlands: That strengthens the case for the local valuation court or county court dealing with the average case of a difference of opinion between landlord and leaseholder.
It is imperative that it is made clear in all outstanding cases which have not yet been agreed that leaseholders can receive the benefit of the Clause and that it will not exclude people who are now in process of negotiation or in a position of stalemate. We do not want to exclude people whose agreements have not been finally and clearly determined.


I wholeheartedly thank the Government for acting so speedily in a matter which has perplexed many thousands of people in South Wales and caused them great anxiety.
Hon. Members opposite have talked a good deal—and I have sympathy with their view—about the owner-occupier, the small man who is suffering from some of the anomalies of the betterment levy. But there has been not one Adjournment debate, not a single question, not one comment from hon. Members opposite about the difficulties and hardships caused to the leaseholder. The leaseholder has suffered not at the hands of the Government, but at the hands of powerful vested interests. It is a pity that hon. Members opposite carry out double standards when it comes to the reform of land and leaseholds.
I hope that this new Clause and the forceful publicity given to the matter of the prices of freeholds in South Wales will lead to the end of the leasehold system and bring justice to many leaseholders in many parts of the country.

Mr. Hawkins: I have very few leaseholds in my constituency, I am not a Welshman and I am not a lawyer; I am a valuer. I want to mention the matter of the principle of valuation. As one who has appeared before the Lands Tribunal, I wish to make it clear that the tribunal is composed of exceptionally able men who are doing a first-class job. It is not expensive to appear before the Tribunal, and in most of these cases one does not want to clutter up the county court or other courts. The hon. Member for Cardiff, North (Mr. Rowlands) referred to people's courts. I do not know what they are.

Mr. E. Rowlands: May I correct the hon. Member? I did not say that there was a court called a people's court. I said that the Lands Tribunal in no sense of the word could be described as a people's court, whereas many people think of the county court and the local valuation tribunal as a popular court before which they can go for a decision.

Mr. Hawkins: I have never heard of people's courts outside Russia. But that is beside the point. The Lands Tribunal is doing a first-class job, and it is reason-

ably cheap to appear before it, as I myself have done.
The hon. Member for Leicester, North-West (Sir B. Janner)—I may have misunderstood him—made the point on the Custins decision that the tenant was a bidder in the open market and that it was not a matter of the principle of valuation.

Sir B. Janner: The hon. Member has misunderstood what I was saying. I was saying that we are today discussing whether or not the tenant should be considered as a bidder. Whatever conclusion they came to, the position obviously needs remedying.

Mr. Hawkins: I understood the hon. Gentleman to say that the tenant should not be considered.
This principle is enshrined in other legislation. It is enshrined in agricultural legislation—and the Secretary of State for Wales can confirm this point with his Welsh colleague the Minister of Agriculture—whereby the arbitrator must take into account the sitting tenants bidding in the open market against other tenants. In the case of a farm protected by security of tenure, the valuer must take into account the fact that the sitting tenant will be a bidder against other people in the open market. He will not pay as much as he would pay for vacant possession, but he will pay something between investors' value and vacant possession value. I should have thought that no valuer would believe that Parliament wished to enshrine some other principle.
If Parliament wants to give something to the leaseholder, I do not mind. But, as a matter of principle of valuation, it goes contrary to a lot of legislation in which this principle is enshrined. The Lands Tribunal is the right court to deal with these difficult matters. We should not clutter up other courts, which have so much work to do, with difficult technical matters of this sort.

Mr. Roland Moyle: I confess that I am a Welshman, although I have not lived in Wales for a number of years. I must also confess that I am a lawyer, but I have not practised law for a number of years. I therefore hope that the House will forgive me if I dilute the somewhat heady brew on which it was fed earlier.
I add my congratulations to the Government on seeing fit to introduce the new Clause. It is fair to point out, however, that this subject was first raised with the Government by a number of my hon. Friends and myself. I am only too happy that the Government have seen fit to realise the wisdom of our representations and to act in this way.
This amendment of the Leasehold Reform Act is needed to ensure that justice is done in a number of cases. The principle of allowing leaseholders to buy their freeholds is important only in so far as the right price can be arrived at, because with the pressures of land speculators on property markets it is conceivable that unless we watch this problem with particular care we could concede the principle of leasehold enfranchisement and find it frustrated in practice because prices are too high as a result of market pressures. Therefore, the new Clause is important.
The new Clause is necessary also because justice must be done to a number of other interests. The Government are not to be blamed for overlooking the point about the marriage value in the assessment of the freehold price. They were not alone in this. The Crown Estates Commissioners, who have a large number of leasehold estates and a considerable amount of legal advice at their disposal, have been endeavouring to operate the principle of leasehold reform. They are not bound directly by the Act and have sought only to apply its spirit. The result of their operations in my part of London was that they did not include the element of marriage value in the prices at which they offered their freeholds during the pre-Custins sales which they were making. It is important to bear this in mind.

Mr. E. Rowlands: And St. John's College, too.

Mr. Moyle: My hon. Friend is correct in referring to St. John's College, Oxford.
Another point is that before the Custins case, in attempting to apply the spirit of the Act, the Crown Estates Commissioners were not including the marriage value element in the sale of the freehold. After the Custins case, unless a proposal of this sort were accepted,

they would probably have to include that element. There is a large Crown Estates Commission estate in my area in South-East London which has been divided by the Commission into four areas for the purposes of enfranchisement. They started in the constituency of my hon. Friend the Member for Woolwich, West (Mr. Hamling) and they enfranchised a number of freeholds there. By the time they got to my constituency they would have been enfranchising on the basis of the marriage value. From that point of view, this Amendment is essential and the activities of the Commissioners point to the artificial element in the Lands Tribunal's decision in the Custins case.
Justice must be done in other cases. First, there was a tremendous amount of uncertainty. Given the approach which the Commissioners had been making, the only advice which I could give to leaseholders when the Custins decision was reached was, "I must see the Government to find out whether we can get this decision amended out of the valuation of freehold. You must take no action until you hear from me". They took my advice, but they have waited for five or six months in considerable uncertainty. Uncertainty is not justice. The new Clause will remove the uncertainty.
The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith)—I regret he is not present—begged leave to doubt whether the removal of the marriage value in the purchase of the freehold would do very much in terms of price to alleviate any financial commitments into which enfranchising leaseholders might have to enter. We have carried out an exercise in my area and amounts of £200 or £300 on small terraced and semidetached suburban houses are the normal variation as a result of the Custins decision. The valuers of the various estates approached the freeholders and negotiated prices for the freehold in the London area before the Custins case.
After the Custins decision, they had to go through the exercise of valuing the freeholds in the post-Custins era. In every case there was a difference of £150 to £300 in respect of small suburban semidetached and terraced houses. Perhaps the right hon. and learned Member for Hertfordshire, East, thinks that this is


not an important financial problem, but when one has reached the stage of finding it difficult to take out a mortgage and pay it off before retirement, sums of this order are of considerable importance. For this reason, too, I welcome the new Clause.
We had a very rumbustious contribution from the hon. Member for Hornsey (Mr. Rossi). I do not know whether he thought that the fame of his contribution would be carried to the delegates to the Conservative women's conference, but it was sauced by a certain amount of political passion which entertained us greatly. He greatly entertained us by quoting from the proceedings of the Leasehold Reform Bill in Committee. We on this side of the House know what the hon. Member for Hornsey was doing; he was going through the routine opposition noises which are uttered whenever new legislation is introduced on technical matters, and particularly technical matters relating to land law.
The Opposition have a battle drill, in which they talk about the complexities and difficulties which the profession and laymen will have in understanding the legislation. On such an occasion this sort of generality serves as good ammunition. If he thought that his fame would carry back to the delegates of the Conservative women's conference, I am happy to say that he has earned his bread and butter on this occasion.
8.30 p.m.
The hon. Member made other points about the valuation of the freehold which were perfectly valid, but he knows as well as we do that valuation is an inexact science—

Mr. Julius Silverman: It is not a science.

Mr. Moyle: I quite agree; it is not a science, but we all know that valuers of good will sitting down with Section 9(1), as amended or unamended, can in most cases arrive at figures which are sufficiently close to allow a certain amount of horse trading to take place over the final £200.
My hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) urged the Government to make it clear to valuers what was required, and my hon. and learned Friend the Member for Dulwich (Mr.

S. C. Silkin) said that he was still not happy about the wording of the Amendment. Let us try to get the wording correct. If I remember the text books on the construction of statutes, deeds and documents over which I pored in my youth, debates in the House of Commons are not a source from which evidence can be adduced on the construction of Acts of Parliament. The advice of my hon. Friend the Member for Cardiff, North, therefore, even if it is followed, will not solve the problem. If there is the slightest doubt about the wording, I urge the Government between now and the time when the Bill goes through another place to make sure that the wording is watertight.

Mr. J. Silverman: May I briefly add my congratulation and commendation to the Government on yielding to the representations which have been made on this matter by many hon. Members including myself.
The debate has taken a rather curious course. It has not been a debate on the necessity for the new Clause, but on whether it has been correctly drafted. The whole weight of the discussion has been on the drafting and not on the merits of the new Clause. Hon. Gentlemen opposite who oppose the Bill and the whole principle of compensation have been arguing simply on the draftsmanship. I do not think that it matters very much. Mistakes of drafting are made. Governments obtain the best information available from valuers, lawyers and draftsmen but may nevertheless make drafting mistakes.
Many people thought that the decision in Hearts of Oak v. Custins was a most extraordinary decision and one which could not be and was not anticipated. Leasehold is not a matter exclusively for Wales. In many places in my constituency and in London sales have been made.
My hon. Friends have mentioned the Crown Estates Commissioners and St. John's College, Oxford, but leaving them aside many sales have been made by substantial estate agents in anticipation of statutory notice which had not been served, and prices were offered which were not upon the basis of the Hearts of Oak v. Custins decision, that is, upon the basis of marriage value. The moment the Custins decision was made there was


a reversal of attitude, a complete log jam and negotiations did not proceed, therefore welcome the new Clause, which will put this matter right.
I have spoken at meetings of hundreds of people in Birmingham, not merely my own constituents, and they welcome the provisions of the Act and look forward to being part of the property-owning democracy which we hear so much about from the other side. The Custins decision came as a blow to them.
I hope that the Government will listen carefully to my hon. Friends who have said that the wording should be looked at closely, and that they will not underestimate what was called in the Custins case the ingenuity of lawyers and surveyors to subvert the intentions of Parliament. It is our job to pass legislation, and a decision which does not carry out the intentions of Parliament should be altered.
I hope that the Government will seriously consider introducing a local lands tribunal. There are still many landlords who are trying to be obstructive. There are many obstacles in the path of a tenant if he does not get his lease by negotiation. When the statutory notice is served under the Regulations he can be requested to pay a deposit of £25 before any price is agreed, before he knows whether the landlord is prepared to sell. That is obstacle number one. Then, if the landlord asks a completely unreasonable price, the only remedy he has is to go to the Lands Tribunal, a prospect of expense most formidable for a man of modest means. In most cases we are dealing with such men. He will hesitate for a long time before challenging the landlord.
My hon. Friend should seriously consider the suggestion that has been made. Perhaps the county courts, sitting with an assessor could do something about valuation, but after this I am a little doubtful about whether a county court judge might not be better off without an assessor who is a valuer. Maybe a valuation panel could deal with it. At any rate, a local tribunal is needed. It is important to hundreds of thousands of people that this should work.

Mr. Graham Page: I agree with the hon. Member for Birmingham, Aston

(Mr. Julius Silverman) in his plea for a simpler court to deal with these sort of cases. The Lands Tribunal is a very fine court. It studies the cases which come before it with great care, but there is no doubt that Custins case took a very long time to come before the court and it was a long time before a decision was reached. What is more, such cases have to come before the court without any legal aid. The application of legal aid to the Lands Tribunal might be of some assistance, but I would like to see perhaps a lesser tribunal with an appeal to the Lands Tribunal. That would be some protection against a wrong decision. Perhaps a more junior tribunal is required.
This new Clause shows up this point very strongly. It has taken all this time for a decision to be reached by the Lands Tribunal, and many of us have almost been sitting on the doorstep of the Lands Tribunal waiting for a decision so that we knew how to advise our clients. It is humbug to say that this was due to a misunderstanding, that it is just a little correction which has to be made. I totted up the number of columns of discussion on Clause 9. There were 94 in Committee and 19 on Report. Altogether something like six or seven hours of discussion were taken up on Clause 9.
The Government cannot say that the rules as to compensation under Clause 9 were not fully debated and that there was not full opportunity for the Government and their advisers to consider that part of the Bill word by word. For that reason I dislike being classed with the Government in the comment in Custins case by the Lands Tribunal:
Presumably someone persuaded the majority of both Houses of Parliament that these pro-visions"—
this is referring to Section 9—
provided a reasonably clear basis of valuation.
We said again and again from this side that they did not provide a clear basis of valuation.
It cannot be said that the sitting tenant was not fully considered in those debates. It confuses the issue slightly to talk about the marriage value. This is not clearly understood by everyone. It is understood by those of us who have to deal with this sort of thing; we are talking about the value of freehold and leasehold-interests combined. The two are worth


more together than if each one were taken separately and their values added together. All that Custins case said was that as Section 9 is drawn we have to consider what the freehold is worth to the tenant. I would ask some of those who have spoken to read the Report stage of that Bill, because the Amendment which I moved then was exactly on this point.
I wanted the valuation on the basis of what the property was worth to the tenant. I will not argue that again now. I lost the argument then, and I thought that the value to the tenant would not be considered. I did not think that Custins case would be decided as it has been because I thought that I had lost my argument. But I feel considerable resentment that the hon. and learned Member for Dulwich (Mr. S. C. Silkin) and the hon. Member for Leicester, North-West (Sir B. Janner) should say that this was not considered at any stage in the Bill. On Report I moved an Amendment which sought to value on the basis of Section 5 of the Land Compensation Act, 1961.
Surely it is common knowledge that when one values on that basis one takes into account what a property is worth to the tenant, even what it is worth to a neighbour. In a little booklet issued by "Justice" recently this was drawn attention to as being common knowledge. It said:
We have in mind cases where additional value is given to land because a neighbour might be prepared to pay more than others for that land in order to extend his premises. We believe that the rule should not apply to this sort of situation, and to others where a market for the land, however limited, could be shown to exist outside the needs of the acquiring authority. We consider that a rewording of the rule is necessary in order to remove any doubts.

Mr. S. C. Silkin: The hon. Gentleman misunderstood what I was saying, and therefore his resentment is unwarranted. I thought that I had made it plain that no one in this House anticipated that the Bill, as it was drafted, would lead to the result in Custins case. I understood that the hon. Gentleman said the same thing and that that was why he moved his Amendment.

Mr. Page: Yes, but it is the responsibility of the Government, when this sort

of circumstance has been drawn to their attention, to see that the Act is right.
The Secretary of State for Wales has put forward the Amendment as if the principle was not considered at all. I am not prone to quoting my own speeches, but after the accusations which have been made I feel that I must. In moving the Amendment, where I wanted the House to look at what the tenant was getting and not what the landlord was selling and that the compensation should be based on what it was worth to the tenant, I said:
It is not fair even on that principle, because it considers only what is being taken from the landlord and not the asset which is being acquired by the tenant.
Then I said, as regards the tenant:
He gets the freehold of the land and the bricks and mortar with it. He is put in the position, if he so wishes, to let that property on a further long-lease and at a modern ground rent … We are looking to the point that the tenant is acquiring something by taking the freehold; we are not looking to the value of the asset which the landlord is losing so much as the value of the asset the tenant acquires."—[OFFICIAL, REPORT, 20th June, 1967; Vol. 748, c. 1481.]
I turned it round in various different ways. I drew the Government's attention to the fact that that Amendment would have obliged the tenant to pay what it was worth to him. That having been drawn to the attention of the Government, they should have realised that perhaps there was something which ought to be corrected in the Clause as it stood.
It is not the responsibility of the Opposition to put the Government's Clauses right. But now that we have got them all wrong in this legislation, the Amendment draws attention to a number of other matters which are in doubt as the Clause is drawn. If the Government had chosen to use the law as it stands instead of drawing a new Section 9, we would not have had this trouble. Having drawn it, they left all these doubts and if it is wrong in one respect it may be wrong in others.
We do not want the Government to come back with a new Bill every time. As a consequence, we are being generous and saying in the Amendment, "If you find more doubts, bring them forward on a Statutory Instrument". These are the sorts of doubts which one can clearly see from reading Custins case. In the Custins case the Lands Tribunal seized out of the air various figures, percentages


and so on. Nobody knows whether those are going to be applied in other cases, so it might be as well if the Government thought about whether they should a few more assumptions to Section 9 to make certain in the future; for example, the assumption as to the annual percentage decrease in the value of money by inflation. In Custins case, they refused to take inflation into account, but at the end of the case they said that the case must be taken only on the facts of that particular case and that it was not a precedent; so what are we to take into account in future for inflation? This would make a very big difference in value. The taxation element was partly taken into account in Custins case. In other cases is it going to be taken fully or partly into account or not at all?
A point which arises, not out of the Custins case but on the new Clause itself, is one which the Government should put right right away—the existence of members of the tenant's family as possible successors or as prospective buyers; because all one is doing in the new Clause is excluding the tenant himself. It may be very valuable for his wife to be in the market or not in the market. We have to consider that. The number of years' purchase and the rate of interest applicable thereto in the calculation of the capital value of the ground rent, the number of years and the rate of interest applied to the deferred value calculated from modern site value—these are figures for which some percentages were taken in the Custins case, but whether these are to be precedents in future cases we do not know. Next, there is the development potential of the property and landlords' rights required by the section to be taken into account; the right of the landlord to take the property back for development purposes when there is a long lease. All these things should be settled.
I am not wedded to the wording of this Amendment, but I believe that the Government should take power to amend Section 9 by order, proving that order comes before the House for debate, because there may be hardship again in other cases.
Finally, I want to draw attention to the fact that these mistakes in legislation do cause not so much hardship as in-

justice and unfairness between citizen and citizen. One never knows whether or not to make these provisions retrospective. Where does one draw the line? Someone has had to pay something in the past which, if it happened now they would not pay in the future. It is extremely difficult to know where to draw the line. In the Custins case the figures were not large. The landlord claimed £650 and the tenant said the right figure was £206. The Lands Tribunal said it should be £500.
Those are not big figures, but there will be some resentment, by Mr. Custins himself, for example, and others who have paid on the basis of the Custins case on finding that in future anyone under the same circumstances is getting away with it for £206 instead of £500. I do not know whether the Parliamentary Secretary could give us any assurance on how retrospective this is to be. It would be helpful if he could, and it would be a very great help if he could tell us whether the Government will take powers to amend Section 9 in other respects as well.

Mr. Skeffington: We have had a very interesting debate and I would like to thank the hon. Member for Crosby (Mr. Graham Page) for the very moderate way in which he has moved his Amendment and greeted the Government's new Clause. He was not exactly enthusiastic for it but he seems to see that there is a definite need for something to be done. He was more generous on this occasion than the hon. Member for Hornsey (Mr. Rossi), who damned the Clause and endeavoured to suggest that he had foreseen this decision when he moved his own ingenious proposals in Committee on 27th April.
Because I always like to heap coals of fire if I can, I welcomed the hon. Member's attempt on that occasion to put the matter right, although I note that I then said, and he agreed with me, that in many ways his proposals would make the assessment of the enfranchisement price even more complicated than would the process of normal valuation. It involved trying to find out what was the original ground rent and its circumstances 70 or 100 years ago, or whenever it may have been.
The hon. Member also had to admit that his ingenious scheme—and it was


ingenious—would have been on a quite different basis and the tenant would have paid a good deal in most cases—would still have left many enfranchisement cases which could not come within the ambit of his proposals.
I put it to the Committee, and I must put it on record again, that if we are trying to have the simplest form of valuation—and these valuation points are not simple—it does not help to have two different bases of valuation in the one Bill dealing with the one point. It was for that reason, and not on doctrinaire grounds or because we were not prepared to look at other solutions, that I recommended the Committee to reject the proposal.
The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), who apologised for having to leave, said that it had either been the failure of the Government to communicate their intention, or the intention in the legislation was wrong. That is a point which can always be made by any hon. Member in opposition about any change which the Government propose to make in anything. The right hon. and learned Gentleman was wrong. What Parliament can do, as any Government can, is to frame its legislation as carefully as it can, but, as I have said again and again, these valuation points are very difficult and the courts or the Tribunal must be left to interpret them, and the principle often cannot be interpreted until there is a precise case.
It would make life much simpler for all of us if we did not have to do this—if we could foresee all the many interests connected with the relationship of landlord and tenant in leasehold law, and if we could foresee all the cases and, in a Schedule, cover every possible contingency, which is what the hon. Member for Crosby is suggesting. If that could be done, life would be simple, but it cannot be done and we have to abide by the practical test of these matters when particular cases come to be decided.
Secondly, the right hon. and learned Gentleman and one or two other hon. Members opposite assumed that what the Lands Tribunal decided in this case was obvious and clearly followed. The Tribunal did not say that. It hesitated for a long time before finally deciding that the tenant should be considered as a bidder in the market. It said that the able advocate for the tenant had made a formidable argument. What Mr. Fay

said on that occasion was that while there was a reference to a willing seller the fact that there was not a reference to a willing buyer was a clear indication that the tenant was to be excluded. The landlord's advocate took the other view.
If the matter had gone elsewhere, there might have been a different decision. It was by no means certain, and it could not have been certain after the arguments, that the Tribunal would come to whichever decision? In the end, it decided that on the whole, as the provision was not clear enough in its view, it would give the benefit, as it were, to the landlord. The decision could easily have gone the other way, so it does not very much help to suggest that it was something that could have been foreseen.
Like many other hon. Members, I was very surprised at the decision because in paragraph 12 of the White Paper we have stated very clearly that the basis should be that the house belonged to the tenant, who had bought it or paid for it, and that the land belonged to the landlord. Paragraph 12 states:
It follows … that … the fair price for enfranchisement will be the value of the freehold interest of the site, subject to the lease and its extension of 50 years. This will completely"—
completely—
disregard the value of the buildings on reversion.
As far as we could, and with the help of our advisers and others, we constructed Section 9 of the Act in that belief.
The very fact that the Act itself gives a compulsory right of enfranchisement is bound to affect the market concept. We have the market concept because, as most technical people agree, it is the easiest and fairest way of getting the interest of the landlord assessed in the land. Nevertheless, the Act is bound to affect the concept. It therefore seemed odd to many of us that this decision should be arrived at since a compulsory right was given to the tenant, thus making him secure even if he did nothing else, because he would still get a 50-year extension.
What has been argued by many technical people and specialists, with whom I respectfully agree, is that the tenant might well be willing to pay less for his freehold because he has security. It is said that the main reason for getting the


freehold is to gain security, but that the Act gives him that security even if he does nothing, because he gets the extension. In those circumstances, the decision came as a great surprise to many people. Although I followed with considerable admiration the reasons given for the decision, I know that it did come as a great surprise, that within the context of the Act, the tenant should be considered to be a bidder in the market, and should pay so much more.
I do not wish to say more on the valuation point, though it is important, but it seems very difficult to admit the principle of the tenant being a bidder in the market and there thus being an extra value without bringing in bricks and mortar. But bricks and mortar were the things that were to be excluded on the basis of the White Paper and of the legislation.
The hon. Member for Hornsey spoke of two valuers reaching different figures. All valuers always reach different figures when they start—and each has to do the best he can for his client. As one very distinguished valuer, and an ex-Member, once said. "Broadly speaking, this is common sense buttered up with hunch and hearsay". But it makes it very difficult for parliamentary draftsmen, the Government and all concerned to frame in precise statutory form the particular circumstances that have to be taken into account in reaching a decision.
If I may say so, the hon. Member for Norfolk, South-West (Mr. Hawkins) was wrong in his reference to agricultural tenants. In those cases, as far as my memory serves, the tenant is never a bidder for the freehold: he is a bidder for the lease. The parallel drawn by the hon. Gentleman does not seem to be right in this case.
Faced with this situation, the Government have introduced the new Clause. I have taken careful note of what was said about the wording by my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin). I am sorry that he should think that it is still defective, but I agree, as does the hon. Member for Crosby, that between now and the Bill's progress through another place we must do what we can to get this point right. Tremendous care has already been taken, and, as one always does, we have had a

good deal of advice on the subject both inside and outside the House. I give the assurance that we will look most carefully at this even now to see that it will do what we want to do, namely, to exclude the tenant from being considered a bidder in the market for a house for which he has paid for or inherited.
9.0 p.m.
My hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) made a number of interesting points, to some of which I should like to reply. I have already mentioned the difficulty about these valuation points. If this were relatively simple we would not have the valuation point in rating Act after rating Act. By the Amendment we shall, under Section 9 of the Act, add merely two elements which the court will have to consider. First, the value of the existing ground rent reserved under the original lease for the balance of the unexpired term. Secondly, the value of the site at the expiration of the original term, subject to the right of the tenant to his 50-year extension.
The value of the existing ground rent is normally found by capitalising the annual payment. There are a number of factors that can be taken into account. The value of the site is decided by the Tribunal on current market value basis suitably deferred. If there is a period of 40 years before one can get on the site, that factor must be taken into account in making the value of the site less valuable and the purchase price to the tenant less high than it would be. Those two elements are clearer than before, and they will be the main elements which the Tribunal will have to consider.
Others of my hon. Friends mentioned inflation and tax. In Custins case the Tribunal was firm in its opinion that most valuers agreed that it was impossible to make calculations which would take into account the value of money 30 or 40 years ahead. In the same way, the Tribunal turned its face carefully against the factor of allowing for taxation.

Mr. E. Rowlands: Would my hon. Friend say that the key point, other than the stages which he has outlined, is the rate per cent. at which one comes into the calculation? This seems the all-important question. Will my hon. Friend advise the House on this matter?

Mr. Skeffington: This is a factor which is and always must be taken into account. Whether the Minister ought to take powers under the proposed Amendment, by Order to specify these and then presumably to alter them from time to time is a major question to which I should like to devote a good deal more thought. This point is apposite to my hon. Friend's intervention.
This is a most unusual Amendment coming from the Opposition, and particularly from the hon. Member for Crosby, because he is always so fussy and careful about giving no power to the Minister to do anything. Yet he apparently gives him power to alter the rate of interest, the period, and the way in which it is calculated. It is the most comprehensive power ever given to a Minister about anything, and it is to be done by Order.

Mr. Graham Page: Perhaps the hon. Gentleman missed the sarcasm in it.

Mr. Skeffington: If we have to add any further qualifications to the new Clause in another place, I hope that the hon. Gentleman will prevail upon his hon. Friends to support any Amendment we may make to avoid any mischief which, sarcastically or otherwise, might arise.
I think that it would be very difficult for the Minister to have this power. With the framework that we have, and because of the experience that it has, we think that the Tribunal is particularly apposite to deal with this matter. That being so, this becomes a far less important factor than it would have been. I was asked when the new Clause would bite. The answer is that it will bite on all cases which are not settled by the time the Bill becomes law. That is as far as we can go now.
The great difficulty which arose from Custins was not that the leaseholder paid more than everyone intended he should pay. He has got a very good bargain, even so. The mischief—and I have evidence of this from a number of sources, some of it provided by hon. Members on both sides—is that landlords are holding out for higher prices—as my hon. Friend the Member for Cardiff, North said, in some cases this amounts to about £200—ever since the Custins case.
My hon. Friend the Member for Lewisham, North (Mr. Moyle) said that

47 cases had been prepared by a valuer, and that in each case there was a substantial addition to the price merely because of the Custins decision. But, what is worse, not only was more being asked for than was thought to be a fair value—the value in the Act and in the White Paper was the value of the site with the house on it, with the unexpired term—but there was no inducement to settle cases because a landlord could say, "If you do not like it, go to the Lands Tribunal".
Several remedies will be open to the lessee in these circumstances, but they may expose him to certain legal risks and costs, and I am sure that nobody would want that. Whatever may be the disagreements about the calculation, the principle of enfranchisement has been accepted by both sides, and having got that agreement, surely what we want to do is to make this as simple as possible and speed up as much as possible the settlement of these cases.
Several hon. Members asked why this work could not be done by the county courts. We examined this very carefully. There would be enormous advantages if the county courts could take on this work. There are a number of these courts, they are well spread, there would be shorter distances to travel, and the expenses involved would be reduced. The expense factor in connection with the Lands Tribunal has been grossly exaggerated in a number of instances but, even so, there would be merit if this work could be done by the county courts.
The fact is, however, that the Tribunal was specially set up about 20 years ago to deal with these matters of valuation in considerable detail, and it has built up great expertise and specialised knowledge over the years. It would be a big departure to say that these valuation points could be dealt with adequately in the county courts.
I think that the suggestion put forward by the hon. Member for Crosby about there being a right of appeal might be a way of considering this matter. I am not making any firm commitment. There can be no such change in this legislation, but perhaps we can consider whether simple valuation points could be dealt with by the county courts with a right of appeal to the Lands Tribunal. It will be understood that I am undertaking no


commitment. All I am saying is that these are valid points.

Mr. S. C. Silkin: The hon. Gentleman will be aware that the county court is the statutory tribunal for dealing with Landlord and Tenant Act cases and the rent payable for a new lease. There is surely precisely the same kind of compensation action in cases of this kind. The county courts are perfectly familiar with this problem. Is it really such a departure that these matters should go to them, particularly now that the main lines about how these questions should be resolved have already been decided in the two cases before the Lands Tribunal?

Mr. Skeffington: I agree with what my hon. and learned Friend says. It might have been better, from the Government's point of view, if those two cases could have been decided by the county court, but when one looks at the arguments and details of them, one realises the expertise of the tribunal, and appreciates that it is something one could not lightly thrust aside. Of course, county courts deal with some of the matters entering into some of the calculations, and do so extraordinarily well.
This is something we will have to look at again in view of the problem which has arisen. The Lands Tribunal occasionally meets outside of London, the Secretary of State for Wales will know about the position there. It does not mean that parties always have to come to London. This is an important point of principle and I would like to think further about it. I hope, as a result of this new Clause, which with one or two exceptions has been well received, will remove what has been an impediment, and that landlords who have been holding up the price of enfranchisement in the hope of getting more will realise now that this calculation is no longer a valid one and that the question of the outstanding cases will be soon settled.

Question put and agreed to.

Clause read a second time and added to the Bill.

New Clause 3

OTHER LONG TENANCIES

.—(1) Where a tenancy is both a protected tenancy within the meaning of the Rent Act, 1968 and a long tenancy within the meaning

of Part I of the Landlord and Tenant Act, 1954, then,—

(a) if the conditions specified in subsection (2) of this section are satisfied with respect to it, nothing in Part VII of the Rent Act, 1968 (premiums &amp;c.) or the enactments replaced by it shall apply or be deemed ever to have applied to the tenancy;
(b) if any of those conditions are not satisfied with respect to it but the tenancy was granted before 27th November, 1967 Schedule (amount of premium permissible under section (other long tenancies)) to this Act shall apply and be deemed always to have applied to it.

(2) The conditions mentioned in subsection (1)(a) of this section are—

(a) that the tenancy is not, and cannot become, terminable before the end of the term for which it was granted by notice given to the tenant; and
(b) that, unless the tenancy was granted in pursuance of Part I of the Leasehold Reform Act, 1967, the sums payable by the tenant otherwise than in respect of rates, services, repairs, maintenance or insurance are not, under the terms of the tenancy, varied or liable to be varied within twenty years of the date when it was granted nor, thereafter, more than once in any twenty-one years; and
(c) that assignment or underletting is not precluded by the terms of the tenancy and, if it is subject to any consent, there is neither a term excluding section 144 of the Law of Property Act, 1925 (no payment in nature of fine) nor a term making a request for consent dependent on a previous offer to surrender the tenancy.

(3) Nothing in this section shall affect the recovery, in pursuance of any judgment given or order or agreement made before 20th May 1969, of any amount which it was not lawful to receive under the law in force at the time it was received.

(4) In this section and in Schedule (amount of premium permissible under section (other long tenancies)) 'grant' includes continuance and renewal and 'premium' has the same meaning as in Part VII of the Rent Act 1968.—[Mr. MacColl.]

Brought up, and read the First time.

Mr. MacColl: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker (Mr. Sydney Irving): With this Clause we can also take the Amendment of the hon. Member for Worcester (Mr. Peter Walker), in line 8, leave out 'but the tenancy was granted before 27th November 1967' and Government Amendment No. 126.

Mr. Graham Page: On a point of order. May we ask that the Amendment be called for a Division?

Mr. Deputy Speaker: Yes. Mr. Speaker has agreed to the Amendment to new Clause 3 being called for a Division when the time arises.

Mr. MacColl: Clause 70 of the Bill emerged from Committee in a rather drastically revised form. It dealt with the problems of long leases under the two-thirds rateable value, where services had increased in value and, as a result, the property had come into rent control which had the incidental effect that premiums could not be charged. While we were discussing that particular problem in Committee we also had before us a new Clause in the name of the hon. Member for Hemel Hempstead (Mr. Allason) on the wider issue of long leases where the rent reserve, apart from services, was over two-thirds of the rateable value. My hon. Friend the Under-Secretary of State for Wales gave the undertaking that we would look at the problem facing the holders of these long leases and see what we could do about it.
During this period we have held consultations with the Law Commission and given some thought to the drafting of the new Clause. This is the result of our deliberations. It is on substantially the same lines as that proposed by the hon. Member for Hemel Hempstead. Its main effect is to take out of Part VII of the Rent Act, which deals with premiums, long tenancies which fulfil certain conditions set out in subsection (2). These are, first, that the lease cannot be determined by the landlord before the end of the term for which it was granted—it must be more than 21 years certain. Secondly, the rent cannot be increased more often than once every 21 years, and thirdly, the tenant is able to assign the lease. This deals with the main point we were discussing upstairs, that if one had a lease where it was not possible to increase it less than every 21 years, the lessee would be protected from abuse of exemption from premiums.
9.15 p.m.
We realised that there was a problem about what was to happen about people who bought long leases when it was legal to do so and sold them after it had become illegal, in 1967, without realising that it was now illegal. Such people might be at the mercy of unscrupulous purchasers hoping to have a saleable

lease and demanding back the money they paid for it. Because of that possibility this exemption is to be retrospective to 20th May, the date when the Clause was published.
The Schedule deals with a rather tricky point. There may be people who lawfully bought long leases which do not come within the Clause. If they lawfully purchased before 27th November, 1967, the Schedule provides that on a further assignment they may charge a premium which bears the same proportion to the premium already paid as the remaining term which is being assigned bears to the term for which the lease was acquired.
That is the broad outline of the new Clause. If some points arise on it I will do my best to clear them up.

Mr. Allason: As the Parliamentary Secretary said, Section 39 of the Leasehold Reform Act brought a great deal of grief with it. We have ironed out in one new Clause which was inserted in the Bill in Committee one difficulty, but there was another difficulty which we pressed during Committee and received the assurance which the hon. Gentleman has mentioned. This new Clause is the result.
I congratulate the hon. Gentleman on having brought the Clause forward fairly quickly, but the timing is unfortunate. The notice was given on Monday so we were able to see this new Clause only on Tuesday. That did not give a great deal of time to go into it in detail to see whether it entirely meets the case. Nevertheless, it is better to receive it on the Floor of the House than that it should first appear in another place and we should see it only as a Lords Amendment.
The cases with which this Clause is intended to deal are where there are obvious ground rents but they do not come within the technical definition of being two-thirds of the loss of the rateable value. In consequence, the difficulty has been that the owner-occupier has been unable to dispose of his lease even though he has a valuable commodity and probably paid substantially to obtain the lease. The Clause meets at least some of our proposals. I have one reservation about it, but I think the House will agree that the essential features of these cases


is that where there is a long lease and a fixed rent for a period of 21 years or more the rent is likely to be below the market rent and, therefore, merits a premium.
I congratulate the Joint Parliamentary Secretary on an innovation, in that the Clause speaks of
… the Rent Act 1968 … or the enactments replaced by it …
That precisely meets a point we made in Committee on another occasion. It was said to be impossible to carry out our suggestion. We were told that we must always deal with the previous enactments even though they may have been repealed. I am glad to see this improvement in drafting, which we suggested.
Subsection (1)(a) deals with the cases we mentioned where there is a long lease at a fixed rent, fulfilling the conditions set out in subsection (2). These are, first, that the lease cannot be terminated before the end of the term by action by the Landlord; second, that the rent cannot be varied; and, third, that an assignment or under-letting is permitted.
I am worried about the condition in subsection (2)(a) that the tenancy is not or cannot become terminable before the end of the term for which it is granted. If it is granted for 21 years, well and good, for this will bring it within the conditions. But if it has been granted for a period of 42 years with a break at either side at 21 years I imagine that this would take it outside subsection (1)(a), because the condition of an unbroken lease would not be fulfilled. In these circumstances, purely fortuitously because of the way in which the lease is drawn up, it, will come under subsection (1)(b), where it does not receive the same treatment; it is treated under the Schedule, which is very different. Is that really what the Government intend? Surely where there is a lease of 21 years certain they would wish it to come within subsection (1)(a). It is too late to consider Amendments, but perhaps they would like to consider the wording and see whether it is entirely satisfactory.
Next we come to the conditions under which the new Schedule applies. These are cases which did not argue in Committee but the Government have covered them. They are cases where the lease

is breakable over the whole of its term. I have mentioned the lease where there may be an option to break at 21 years in a 42-year lease. But it is difficult to see what is intended here, because the reference is to the Landlord and Tenant Act, 1954, and to the definition of a long lease in that, which is:
… the expression 'long tenancy' means a tenancy granted for a term of years certain exceedingly twenty-one, years whether or not subsequently extended by act of the parties or by any enactment.
Surely that means that it would be possible to terminate the lease by unilateral act of the landlord in under the 21 years. It is thus a little difficult to see how subsection (2)(a) will operate. Subsection (2)(b) refers to the rent and one can conceive that during the 21 years a tariff may be fixed over the lease—for example, the first seven years at £100, the second seven years at £110 and the third seven years at £120. I take it that this is the sort of case which the Government are covering. I cannot understand how the third case can arise, because if assigning to another letting is prohibited I cannot see how this Schedule comes into the Bill at all.
I understand that the Schedule means that the tenant—the owner-occupier—cannot obtain the market value of his tenancy but only a proportion, in relation to the length of the lease left, of what he has paid in premium or in repairs or improvements to the property. It is rather difficult to see whether this is entirely reasonable in the circumstances I have outlined. Although there is a term of years, because there is a variation in the fixed terms of the lease, why should there be a severe restriction forcing any owner-occupier in these circumstances to take very much less than the market value?
The date in the new Clause is the date of the coming into force of the Leasehold Reform Act. It is unlikely that anyone immediately after that time would have started granting long leases at rents just over two-thirds of the rateable value. But it is possible with an existing lease of that type, to assign and possibly renegotiate on some minor clause for the benefit of a new tenant. I take it that that would count as a new tenancy and therefore would fall outside the terms of the lease. I do not suppose there are many such cases, but the point is why there should


be a cut-off at a certain time. Why should we not in future grant long leases at low rents? There is an artificial restriction on leases. Either one grants a lease at a rack rent or one grants a lease at less than two-thirds of the rateable value, in which case one is allowed to charge a premium. Between the two, there is a gap artificially inspired by the Government.
For many people a very low rent and a substantial premium is a satisfactory way of obtaining security for their house. But those who cannot afford the higher premium may prefer to pay a larger rent and a lower premium, but to have the 21 years security on their house. Those people are being left out in the cold at present. The Government have produced an artifical distinction. They now have an opportunity to remove that distinction by accepting our Amendment.

9.30 p.m.

Mr. Rossi: I should like to thank the Government for introducing the new Clause. I also wish to thank the Parliamentary Secretary for the mild and apologetic way in which he introduced it. He gave full credit to my hon. Friend the Member for Hemel Hempstead (Mr. Allason), who put forward the proposal in Standing Committee upstairs.
The proposal has far earlier origins than the Standing Committee on the Bill. The matter was discussed at length, and almost ad nauseam, during the Committee stage of the Leasehold Reform Bill. I should like to remind hon. Members of the history of Section 39 of the Leasehold Reform Act, as it now is, which is dealt with in this new Clause. That Section was involved in one of the Prime Minister's dramatic interventions to which we have become so accustomed, in which he told us, quite irrelevant to the whole question of leasehold reform—

Mr. Speaker: Order. We cannot go into history and political characterisation. The hon. Gentleman must come to the Amendment.

Mr. Rossi: Most regretfully, Mr. Speaker, I must follow your Ruling. I thought that it was relevant to the discussion to consider the way in which the new Clause had evolved and had found its way on to the Notice Paper. Perhaps I started the historical treatise a little too far back in point of time, but I

thought that if we had the background we could see the matter in perspective. I leave it at that.
It is a valid point that time after time during debates on what is now Section 39 of the Leasehold Reform Act, we urged leases in which premiums paid should be excluded from this particular effect. Time and again the Parliamentary Secretary, in his usual gentle, mild way, deflected our attack on his proposals, saying that it was contrary to his principle or that it was not practical, or by giving one of his excuses.
The hon. Gentleman would not listen when we made the kind of proposals relating to valuations which we discussed on the last new Clause. He would not listen to our arguments that if he persisted in Section 39 as it was proposed, there would be hardship and anomaly. So he legislated and Section 39 became law. He well knows the representations which have been made to him since that Section went on to the Statute Book. It involved a number of people who had bought long leases for substantial premiums and who then, because of the provisions of Section 39, had on their hands a completely diminished asset, which they could not sell and upon which they could not obtain building society mortgages.
This was a dreadful state of affairs for a great many people. If hon. Members opposite had discarded for a moment their party political bias and had listened to reason and argument, we should have been saved this debate this evening. It would be completely unnecessary. I am glad that no hon. Member opposite has had the temerity to say, "We can congratulate ourselves on bringing forward the new Clause and helping these people". At least they have learnt from the last debate that that is not on and that we shall not allow them to get away with it.
We have tabled an Amendment in line 8 to delete the words
but the tenancy was granted before 27th November, 1967".
I assume that those words mean that if a lease was granted after 27th November, 1967, even if it were granted at a premium after that date, if it were for 21 years or more and the two-thirds rateable value principle applies, it is caught by Section 39 of the Leasehold Reform Act.
We wish to avoid that, and that is the reason for our Amendment.
We see no reason why there should be a differentiation between a lease granted or transferred at a premium before this particularly artificial date and a lease granted, as many leases have been granted, after 27th November, 1967, in which this kind of hardship exists. Even for the future, I cannot see why it should not be possible to grant leases of more than 21 years at a premium and for them to retain a market value.
I can understand the Government's feeling. This date is a bit of face-saving on their part. They want to justify Section 39 of the Act. They recognise that some people may have been caught and treated very harshly who had leases granted before the Bill was promulgated and they take 27th November as the date on which people should not have granted leases on those terms, knowing what the Bill contained. Therefore, we say that we should help people who have been caught by the Measure but that from now on they must be wise and not do this kind of thing. What they do not consider is the value of being able to create and grant leaseholds of this nature at a premium and have a market for them. The Government are mistaken in being so restrictive. For that reason, we seek to delete the words in line 8 of the new Clause.
The next matter which causes me concern is subsection (2)(a) of the new Clause, which provides that a lease will not have the benefit of the new Clause if it can be brought to an end, before its natural expiration in terms of length of years, by a notice given to the tenant. I assume that the Government have in mind the situation where a lease of more than 21 years is granted, but where the landlord has the right to terminate that lease before the 21 years are up by serving on the tenant a notice saying that the term must come to an end in three or six months; in other words, the lease can be for less than 21 years because it can be terminated by notice. This situation is probably what the Government have in mind and wish to exclude by this subsection.
I wonder whether the Government might be running into other difficulties. There may be a long lease terminable by notice under Section 146 of the Law

of Property Act where there has been a breach of covenant. The court can grant relief against the lease being terminated in that way, and ultimately a landlord will rely upon the order of the court, but the order of the court will be merely to confirm or otherwise the notice that has been served.
Technically—I think I am right in this, but the Minister may wish to check it with his legal advisers—it is possible for a long lease to be terminable by notice, but not in the situation which he envisages here of a landlord being able at will to give a straight notice saying that the lease will come to an end in three months' time. It is possible under Section 146 to terminate the lease for a breach of covenant. If I am right on this, every conceivable lease is excluded. Virtually every long lease contains covenants as to repairs, for example, and Section 146 will apply.
If I am right in my interpretation, subsection (2) will make complete nonsense of new Clause 3 in its present form.

Mr. A. P. Costain: Does my hon. Friend consider that if a lease is broken because the rent is not paid a similar state of affairs will exist?

Mr. Rossi: I am grateful to my hon. Friend. The non-payment of rent is another example. There may be bankruptcy, composition with creditors and, with a company—we are not here concerned with companies—a winding-up order not in pursuance of amalgamation and reconstruction, and so on, with which I feel sure most of my hon. Friends are familiar.
There is also the question of a notice for a rebuilding clause. A lease may contain a clause under which the landlord has the right to serve three or six months' notice terminating the lease after a given period of years, very often after the first five, six or seven years, if he genuinely needs to reconstruct or redevelop. This is quite common, particularly in the inner parts of our cities.
That kind of clause is not directed to evasion of the Rent Acts. Section 39 of the Leasehold Reform Act was directed specifically to the evasion of the Rent Acts by creating leases for 21 years and one day, with the right to terminate the lease before that period had elapsed


by simple notice. I am not now discussing a simple notice. I am discussing a notice where a lease is terminable on a genuine intention to redevelop. Is it the intention of the Government that such a lease should not have the protection of new Clause 3?
9.45 p.m.
Subsection (2)(b) says that where there is a rent review clause for more often than once in every 21 years, such a lease will not have the benefit of new Clause 3, but if the lease has resulted from the operation of the Leasehold Reform Act, 1967, then it does get the benefit of the new Clause. In other words, if someone is a long leaseholder and exercises his right under the Leashold Reform Act, and instead of asking for freehold, asks for a new lease for 50 years and that lease gives him rent review clauses more frequently than once in every 21 years, as can be done under the Act, then that kind of lease has the benefits of new Clause 3 and could be sold at a premium without any illegality.
Why should that kind of lease be so far different from an ordinary lease say, of 50 years, granted by negotiation between the freeholder and someone else? What is the magic in this? Perhaps the Parliamentary Secretary would explain and tell us what is the difference between a lease granted under the provisions of the Leasehold Reform Act, and one freely negotiated between the parties where the terms could be identical?
I mention (2)(c) with a little diffidence because I am not as familiar as I might be with Section 144 of the Law of Property Act, 1925. By the wording in brackets I assume that the intention here is this, that where a lease contains a condition that the leaseholder may not assign or transfer his lease without the consent of the landlord—and then the condition goes on to exclude the provisions of Section 144 which prohibit the charging of a fine or an increased rent or a premium—the benefit of the new Clause shall not apply. Putting it another way, if a landlord can, as a condition of his consent, charge an increased rent or premium, then that lease will not have the benefit of the new Clause.
I seem to recall, and I may be mistaken, that in Section 17 or 19 of the 1927 Act it is said that it is illegal, as a condition of a consent for assignment

of a lease, to say that an increased rent or premium shall be charged. That is why it is today common form in leases to have an absolute prohibition against assignment of leases, because then the tenant has to go cap in hand to the landlord and say, "I know that you have told me that I cannot under any circumstances assign my lease, but please let me do so". The landlord then asks, "What is it worth?" and he gets his premium that way. If he puts in the words
shall not assign without the consent of the landlord
first of all, the words
which consent shall not be unreasonably withheld
are immediately imported by Statute, under the 1927 Act, and it has been judicially decided that that means that the charging of a premium, increasing rent, is illegal. If I am right about that, perhaps the Minister would be good enough to explain the meaning of the reference to Section 144 of the Law of Property Act, 1925.
The next matter on which I seek the assistance of the Parliamentary Secretary relates to subsection (3). We are told there that where there has been a judgment or agreement made before 20th May, 1969, concerning the payment of recovery of a sum of money, nothing in the new Clause shall prevent that payment or recovery being made. I understand the position to be that, under Section 39 of the Leasehold Reform Act, it has become illegal in the circumstances that we are considering to charge a premium for a lease.
It may have happened on many occasions that someone has assigned or transferred a lease for a sum of money in contravention of that Section and, having paid his money, the person acquiring the lease may then have said, "The payment that I made was illegal. I want my money back", as he was and still is entitled to do until the new Clause becomes law.
We are now told that where someone has been tricked into selling his lease for a premium to someone who has taken the lease, gone into possession, then drawn upon Section 39 and asked for his money back, and there has either been an agreement before 20th May, 1969, or a judgment of the court that the money is paid back, nothing in the new Clause will protect the poor "mug"


who has transferred his lease for money which he has now to pay back. That cannot be right, and I would like the Government to reconsider these circumstances.
We are saying, in effect, that Section 39 of the Leasehold Reform Act is wrong, that it is a bad piece of legislation, that it should never have come on the Statute Book, and that people in these circumstances should have been freely able to pay over their money. We are saying that Parliament has made a mess of it, it has caused people to prejudice their position, someone has parted with money, but we shall not let him get it back.
The Government should reconsider this matter. If they feel that it is impossible to make the man who has got the judgment regurgitate the money, let us give compensation. After all, the mistake is ours. It is the State's mistake. We have placed these people in this position. We have made people sell their leases and have to give the money back again. In those circumstances, let us compensate them for the injustice that we have done.
Mr. Speaker, I beg your forgiveness if I have taken longer on this Clause—

Hon. Members: Hear hear.

Lieut.-Colonel Sir Walter Bromley-Davenport: No, not at all. They do not understand it.

Mr. Speaker: Order. The hon. Member for Hornsey (Mr. Rossi) needs no encouragement.

Mr. Rossi: At this late stage, after a full discussion in Committee, when all our attempts at this kind of Amendment were resisted, we are suddenly presented with a form of words which is very difficult to follow and which we have had only two or three days to study. It is important that we probe and analyse and ask for a detailed explanation as to what exactly the wording is. That is what I have sought to do.

Mr. Speaker: Order. I might be forgiven for reminding the House that we are debating three out of some eight new Clauses to be followed by debates on 37 Amendments plus Government Amendments. Reasonably brief speeches will help.

Mr. MacColl: The hon. Gentleman asks what was the magic about 21 years and why we have fixed our attention on that. One answer is that in the new Clause 19, which is put forward by hon. Gentlemen opposite, there is reference to a term of years exceeding 21 years and at a rent the amount of which is stated to be not subject to review during the first 21 years of the said term. That is one of the reasons why we felt that this was the right approach to the problem.
I recognise the difficulty that hon. Members have had, mentioned by the hon. Member for Hemel Hempstead (Mr. Allason), in analysing this new Clause at fairly short notice. We were in the dilemma that we could either have persuaded some of our noble Friends in another place to put it down and have it considered there, giving longer time to consider it, or we could take the opportunity of putting it down now. It seemed to us that the best thing to do was to put it down for debate and for discussion of some of the implications that have been raised and then, if it is necessary to improve it in another place, that can be done.
I would like to make one or two points about Section 39. For the sake of the record and not wanting to be in any way pedantic, Section 39 is now Section 2(1,a) of the Rent Act, 1968, although most of us know it and have been discussing it as Section 39. I do not at all accept the argument that it was a mistake to put that Clause into the Leasehold Reform Act, when there was growing abuse and people on television were glorying in the fact that they were making rings round the Rent Act by the use of long leases with frequent breaks for rent increases. Therefore, it was essential that the Government should put something down.
It is quite true that it has been shown that this was causing hardship to some people. We have now, in three respects taken steps to invite the House to put those hardships right. I want to make clear, therefore, that the reason why we are doing this is because we want to protect these people. This is the real argument against the Amendment. It is not because we believe that Section 39 is now unnecessary, for we do not. We think it is important still to prevent abuse,


but we want to take out of it perfectly bona fide long leases where there is adequate protection.

Mr. Maddan: Will the hon. Gentleman tell us whether when he has taken out the abuse this is for past sins, what is the position pre-27th November, what is the position between then and now, and what is to be the position for the future? Frankly, I cannot understand it.

Mr. MacColl: I am very fond of my own voice, but I do not think I would like to act like a gramophone record and to go again through the speech I made at the beginning. I believe I deployed clearly the scope of the Clause and hon. Members will be able carefully to study it, as I am sure they always study my speeches, in the OFFICIAL REPORT, and obtain some idea of what it is about.
I should like to make a technical point. The hon. Member for Hornsey talked about termination by notice. He asked about somebody who defaulted on rent. Surely that is forfeiture—

It being Ten o'clock, the debate stood adjourned.

Ordered,
That the Proceedings on the Housing Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Harper.]

Question again proposed, That the Clause be read a Second time.

Mr. MacColl: —rather than termination.

Mr. Rossi: It is a question of terminology, but we are concerned with the meaning of the words we are using. Is a notice served under Section 146 of the Law of Property Act, as a result of which a tenancy becomes terminable, caught by this wording, yea or nay? I think that it is and that the Government may have to amend the provision.

Mr. MacColl: My advice is that it is not, but under that Section all that happens is that a preliminary notice to terminate the lease is necessary before forfeiture for a breach of covenant can be enforced. The hon. Gentleman, however, shows a knowledge of the law of property with which, not since my humble and inauspicious third in that subject many years ago, could I possibly hope

to compete. We will study the debate to see whether we have missed some points.
I draw the attention of hon. Members to the fact that in its present form the Amendment is wrong, because it refers to premiums lawfully paid whereas under the form of the Clause they would not be lawfully paid because they would be paid after the date, but that is purely a drafting matter.

Mr. Graham Page: We want to know whether in future it is to be illegal to grant a lease for 21 years on a premium. Will it be impossible to recover that premium on sale if a lease is granted in future? The Amendment is aimed at that and that alone.

Mr. MacColl: The two-thirds rule would still apply, but apart from that the intention is that the rules about premium would apply if it were not more than 21 years. The object is to leave a reasonable protection for tenants by avoiding having a break in the rent and having a lease going on for 21 years. Provided that there are those two protections, there will be no objection to charging a premium. I readily agree that this is a difficult problem but this is not something which has been sprung on the House. Hon. Members have complained that we should have done something more quickly, but we have taken account of what has been said in debates. We have heard the views of the Law Society and the matter has been discussed with the Law Commission. The Clause seems a reasonable compromise and I invite the House to give it a Second Reading.

Mr. Costain: If it is perfectly legal now to charge a premium, what about the people who bought the premium? Is it legal for them to sell again after this magic date and to take a premium in future?

Mr. MacColl: If it is outside this part of the Rent Act, that applies to every assignment, to the first grant of the lease and every assignment.

Question put and agreed to.

Clause read a Second time and added to the Bill.

Amendment proposed to the proposed Clause: In line 8, leave out, 'but the tenancy was granted before 27th November 1967'.—[Mr. Peter Walker.]

Clause added to the Bill.

Question put, That the Amendment be made:—

The House divided: Ayes 62, Noes 126.

Division No. 232.]
AYES
[10.5 p.m.


Allason, James (Hemel Hempstead)
Griffiths, Eldon (Bury St. Edmunds)
Pym, Francis


Astor, John
Gurden, Harold
Renton, Rt. Hn. Sir David


Boardman, Tom (Leicester, S. W.)
Hall, John (Wycombe)
Ridley, Hn. Nicholas


Body, Richard
Harris, Reader (Heston)
Rossi, Hugh (Hornsey)


Boyd-Carpenter, Rt. Hn. John
Hawkins, Paul
Russell, Sir Ronald


Boyle, Rt. Hn. Sir Edward
Holland, Philip
Scott-Hopkins, James


Bromley-Davenport, Lt.-Col. Sir Walter
Hornby, Richard
Shaw, Michael (Sc'b'gh &amp; Whitby)


Carlisle, Mark
Hunt, John
Silvester, Frederick


Carr, Rt. Hn. Robert
Irvine, Bryant Godman (Rye)
Smith, John (London &amp; W'minster)


Clegg, Walter
Kershaw, Anthony
Taylor, Frank (Moss Side)


Costain, A. P.
Kirk, Peter
Turton, Rt. Hn. R. H.


Dance, James
Kitson, Timothy
Walker, Peter (Worcester)


Dean, Paul
Legge-Bourke, Sir Harry
Walters, Dennis


Dodds-Parker, Douglas
McNair-Wilson, Michael
Whitelaw, Rt. Hn. William


Drayson, G. B.
McNair-Wilson, Patrick (New Forest)
Wiggin, A. W.


Errington, Sir Eric
Maddan, Martin
Wilson, Geoffrey (Truro)


Eyre, Reginald
Maydon, Lt.-Cmdr. S. L. C.
Worsley, Marcus


Fortescue, Tim
Mills, Stratton (Belfast, N.)
Wright, Esmond


Glover, Sir Douglas
Morgan-Giles, Rear-Adm.



Goodhew, Victor
Murton, Oscar
TELLERS FOR THE AYES:


Grant, Anthony
Nott, John
Mr. Bernard Weatherill and


Grieve, Percy
Page, Graham (Crosby)
Mr. Humphrey Atkins.




NOES


Allaun, Frank (Salford, E.)
Hamilton, William (Fife, W.)
Mellish, Rt. Hn. Robert


Anderson, Donald
Hannan, William
Mendelson, John


Archer, Peter
Harper, Joseph
Millan, Bruce


Atkinson, Norman (Tottenham)
Harrison, Walter (Wakefield)
Miller, Dr. M. S.


Benn, Rt. Hn. Anthony Wedgwood
Hattersley, Roy
Molloy, William


Bidwell, Sydney
Hooley, Frank
Morgan, Elystan (Cardiganshire)


Bishop, E. S.
Houghton, Rt. Hn. Douglas
Morris, Alfred (Wythenshawe)


Blackburn, F.
Howie, W.
Morris, Charles R (Openshaw)


Blenkinsop, Arthur
Hoy, James
Moyle, Roland


Booth, Albert
Huckfield, Leslie
Murray, Albert


Boston, Terence
Hunter, Adam
Newens, Stan


Bottomley, Rt. Hn. Arthur
Hynd, John
Norwood, Christopher


Boyden, James
Jackson, Peter M. (High Peak)
Oakes, Gordon


Broughton, Dr. A. D. D.
Janner, Sir Barnett
Oswald, Thomas


Brown, R. W. (Shoreditch &amp; F'hury)
Johnson, Carol (Lewisham, S.)
Owen, Will (Morpeth)


Buchan, Norman
Johnson, James (K'ston-on-Hull, W.)
Page, Derek (King's Lynn)


Butler, Herbert (Hackney, C.)
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Palmer, Arthur


Butler, Mrs. Joyce (Wood Green)
Kelley, Richard
Pannell, Rt. Hn. Charles


Carmichael, Neil
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Pardoe, John


Carter-Jones, Lewis
Kerr, Dr. David (W'worth, Central)
Parkyn, Brian (Bedford)


Crawshaw, Richard
Kerr, Russell (Feltham)
Pavitt, Laurence


Davies, Edynfed Hudson (Conway)
Lawson, George
Peart, Rt. Hn. Fred


Davies, Dr. Ernest (Stretford)
Leadbitter, Ted
Prentice, Rt. Hn. R. E.


de Freitas, Rt. Hn, Sir Geoffrey
Lee, Rt. Hn. Frederick (Newton)
Price, Christopher (Perry Barr)


Delargy, Hugh
Lestor, Miss Joan
Rodgers, William (Stockton)


Dempsey, James
Lubbock, Eric
Rowlands, E.


Dobson, Ray
Lyon, Alexander W. (York)
Ryan, John


Dunwoody, Mrs. Gwyneth (Exeter)
Lyons, Edward (Bradford, E.)
Silkin, Rt. Hn. John (Deptford)


Dunwoody, Dr. John (F'th &amp; C'b'e)
McBride, Neil
Silkin, Hn. S. C. (Dulwich)


Eadie, Alex
MacColl, James
Silverman, Julius


Edelman, Maurice
Macdonald, A. H.
Skeffington, Arthur


Edwards, William (Merioneth)
Mackintosh, John P.
Tinn, James


Ellis, John
Maclennan, Robert
Tuck, Raphael




Wallace, George


Evans, Ioan L. (Birm'h'm, Yardley)
McMillan, Tom (Glasgow, C.)
Watkins, David (Consett)


Fitch, Alan (Wigan)
McNamara, J. Kevin
Wellbeloved, James


Fowler, Gerry
MacPherson, Malcolm
Wells, William (Walsaff, N.)


Fraser, John (Norwood)
Mallalieu E. L. (Brigg)
Whitlock, William


Freeson, Reginald
Mallalieu, J. P. W. (Huddersfield, E.)
Williams, Alan Lee (Hornchurch)


Gardner, Tony
Manuel, Archie
Winnick, David


Greenwood, Rt. Hn. Anthony
Marks, Kenneth



Gregory, Arnold
Marquand, David
TELLERS FOR THE NOES:


Grey, Charles (Durham)
Mason, Rt. Hn. Roy
Mr. Ernest G. Perry and


Griffiths, Eddie (Brightside)
Mayhew, Christopher
Mr. John McCann.

New Clause 4

RESTRICTION ON POWERS OF COURT UNDER SECTION 56

(1) On an application under section 56(2) of this Act with respect to any dwelling the court shall not make an order empowering the landlord to enter and carry out any works if, not earlier than six months before the hearing, the rating authority for the area in which the dwelling is situated have certified that the tenant's income is within the limits for rate relief.

(2) The rating authority shall, on the application of the tenant, certify that his means are within the limits for rate relief if—

(a) he has been granted a rate rebate under section 49 of the General Rate Act 1967 for the rebate period in which his application for the certificate is made; or
(b) he would, on an application duly made, be entitled to such a rebate for that period or would be so entitled but for section 16(2) of the Ministry of Social Security Act 1966; or
(c) his reckonable rates for that period do not exceed £3 15s. 0d. and his reckonable income docs not exceed the appropriate limit;

and for the purposes of this subsection a person's reckonable rates for any period and the question whether his reckonable income exceeds the appropriate limit shall be determined as on an application for a rate rebate.

(3) An application for a certificate under this section must state the name and address of the landlord; and if on such an application the rating authority issue a certificate they shall send a copy of it to the person named in the application in pursuance of this subsection.

(4) For the purposes of any proceedings under section 56(2) of this Act any document purporting to be a certificate issued by a rating authority under this section and to be signed by the clerk to that authority shall be deemed to be such a certificate unless the contrary is proved.

(5) Any person who, for the purpose of obtaining such a certificate—

(a) furnishes any information which he knows to be false in a material particular; or
(b) withholds any material information; shall be liable on summary conviction to a fine not exceeding £20—[Mr. Greenwood.]

Brought up, and read the First time.

Mr. Greenwood: I beg to move, That the Clause be read a Second time.

Mr. Speaker: With new Clause 4 I have suggested that we discuss new Clause 8—Exemptions of low income tenants from compulsory order:
Section 56 of this Act shall have effect subject to the following provision:
A tenant whose earnings are less than £16 per week, according to income tax returns, or, if he has dependants, less than £16 per week plus 30s. a week for each dependant, shall be exempted from such an order.

Mr. Greenwood: Under Clause 56 the court, in considering whether to make an Order empowering a landlord to carry out improvements for a tenant who is unwilling to have them, must have regard, among other things, to the tenant's means in relation to the increase in rent that would result and the stages in which that increase should become recoverable under the phasing provisions. This is one of the many safeguards for the tenant that we have introduced to meet criticisms that have been made since the White Paper was published. In Committee we promised to look into this question of means. I have given a good deal of thought to how low income tenants could be excluded from the compulsory provisions in Clause 56. I considered the suggestions of my hon. Friend the Member for Salford, East (Mr. Frank Allaun), but felt bound to reject them, and no doubt my hon. Friend the Parliamentary Secretary will deal with this when my hon. Friend has moved his new Clause.
Another possibility which I considered was whether eligibility for rent rebate provided a practicable basis for exemption, but rent rebate schemes vary as between different authorities and some—admittedly a minority—have no schemes. In addition, to try to apply even the Ministry's model scheme would pose great difficulty as it has no statutory basis.
10.15 p.m.
The new Clause provides an exemption based on eligibility under the rate rebate scheme. I believe that this is the most practicable way of excluding low income tenants because the rate rebate scheme has a statutory basis in the General Rate Act of 1967 and can be simply applied. Basically, persons qualify for full rate rebate if their income is up to £9 a week if they are single, and £11 if they are married, plus in either case £2 a week for each dependent child. The income taken into account is everything received by way of earnings, family allowance, interest, and so on, before any deduction for tax, but excluding any payments by lodgers in the six months before the period for which rebate is claimed.
Where the income exceeds those limits, a reduced rebate is payable on a tapering scale depending on the level of income and the amount of the rates. Even in certain cases where the income


is higher than that to which I have referred the rate rebate is payable. The new Clause would provide exemption from Clause 56 where the tenant was entitled to any rate rebate no matter how small, and I ask the House to remember that I can vary the rate rebate limits by Order as and when required.
I should add that in the case of tenants who are outside the operation of the new Clause, that is to say, whose income is above the limit for which a certificate of rate rebate may be issued, Clause 56(4) will apply. That provides that in determining whether to make an order the court is to have regard, amongst other matters, to the tenant's means in relation to the increase of rent that would result if the works were carried out. This is another of the many safeguards for the tenant that we have provided in the Bill.
There was some discussion in Committee about the definition of the word "means". I understand that the word "means" is used in the county court rules relating to judgment summonses and committal proceedings. It is a well understood term. When considering a person's means to pay the court as a matter of course takes into consideration all the relevant facts, for example, the number and age of his children and his general household expenses. If a tenant giving evidence were to say that he had not the means to pay a fair rent, but was not able to say more, then the court would, by questioning, draw the facts from him so as to enable the court to reach a decision.
Subsection (1) of new Clause provides that the court may not make an order under Clause 56 if, within the six months preceding the hearing, the rating authority has certified that the tenant's income is within the limit for rate relief. Application for a certificate is to be made by the tenant, and under subsection (2) a certificate will be issued if any of the three conditions which are stated therein are satisfied.
Subsection (3) provides for the tenant to state in his application to the rating authority for a certificate the name and address of the landlord and for the authority to send to the landlord a copy

of any certificate issued. The landlord will then know that there is no point in his proceeding further under Clause 56.
We believe that this is a helpful new Clause which will give further protection to tenants, particularly those with low incomes.

Mr. Allason: As we are discussing new Clause 8 with new Clause 4, I had been waiting for the hon. Member for Salford, East (Mr. Frank Allaun) to get up and describe his new Clause. As matters stand I shall have to describe it, because I want to refer to it and I am not allowed to speak twice.
I want to draw attention to new Clause 8 because it is quite something, even for the hon. Member. A tenant whose earnings are less than £16 a week, according to his income tax returns, or, if he has dependants, less than £16 a week, plus 30s. a week for each dependant, shall be exempt from an order of the court under Clause 56 of the Bill, whereby the court has power to order that repairs and improvements shall be carried out even if the tenant does not wish them to be carried out. This is provided that the court is satisfied that the work ought to be carried out, having taken account of the means of the tenant.
The hon. Member, which with his great enthusiasm for ensuring that rents should never rise at all, has taken a half measure in this direction by picking on the figure of £16 a week, below which a tenant shall have the right to opt out of carrying out improvements. It must be remembered that the object of the Bill is to improve houses. We have the safeguard in Clause 56 that if there is to be hardship to the tenant, the court can take steps to prevent it. The hon. Member is suggesting that anyone with an income below £16 a week can opt out.
In Committee, I described a very pleasant flat in South Kensington, with two rooms, kitchen and bathroom separate, which is let for 27s. a week, to a single man. According to new Clause 8, this man would be entitled to object to his rent rising above 27s. a week in return for the flat being brought up to full amenities. This is really nonsense, considering what rents are in the West End. I suggest that the hon. Member's humanity has run away with his common sense.
The hon. Member is only fighting a semi-losing battle because the Minister has come more than half way to meet him, since he has set the limit for a single man at around £9 a week. It appears that a single man with an income of £9 a week is qualified, under new Clause 4, to opt out. Here we are getting much nearer to practical common sense and reason. At £9 a week almost any rent rebate scheme of a local authority would start to operate.
Is this Clause at all necessary? We already have Clause 56, which states that one of the matters to be taken into account by the court is the means of the tenant in relation to the increase in rent. That is much better. The increase in rent may be quite small, but here the Minister is trying to fetter the court by saying that in certain circumstances the rent must not go up by even 1s. a week.
This is ridiculous. If the rent were to rise by £5 per week for someone whose income was only £9 a week, there would be a difficulty which has to be resolved, but if it is to go up by 1s. a week this Clause is using a sledgehammer to crack a nut. It is not right to put a fetter on the discretion of the court. It is much better to leave the court to use its common sense, measuring income against increase in rent.
We now have a new definition of the statutory poor. I use a "shorthand" term in mentioning £9 a week. There are complicated calculations in deciding whether rate relief is allowed or not. There are many anomalies as a result of the Rating Act and provisions for relief, as any municipal treasurer will tell us. It is very difficult to decide on borderline cases and this is not a particularly good test of indigence. We have the example of a married couple on retirement pension with a son living with them and earning £30 a week. They may qualify for rate relief even though the income coming to that household is very substantial.
I understand that where supplementary benefit is claimed this, also, will come under the terms of the Clause. If someone is not receiving rate relief, because he is receiving supplementary benefit, he will be entitled to object to improvement leading to an increase in rent. Is this desirable? People on supplementary benefit will have the benefit increased if the rent increases. All we are doing is

to give them the right to ensure that their property is not improved.
Many hon. Members may say that that is all right because, naturally, people want their property improved, but that does not always follow. We could all quote from experience instances of individuals who do not want improvements made. They like living in the way they have always lived and want to continue like that. Yet the object of the Bill is to get houses improved.
This Clause will be an open invitation to those who will not be affected by the cost to themselves to avoid having improvements made to their homes. I agree that there is a very difficult problem here, which the Government must face up to, that there are those, even above supplementary benefit level, who cannot afford modern rents, fair rents as the Government visualise them.
Is it really right that the landlord should continue to subsidise such people by being required by law to accept a rent far lower than the fair rent, remembering that the fair rent is not the market rent? A fair rent is what one would think landlords are entitled to, yet many of them have for many years been required to subsidise tenants by ensuring that they will remain on the old controlled rents.
The new Clause is an encouragement to them to make sure that many more houses will not be improved. It would be far better to leave matters as they are under Clause 56, giving discretion to the court, rather than to fetter it.

10.30 p.m.

Mr. Frank Allaun: Although I have deep and indeed bitter feelings on this issue, I shall be brief because of the hour and the other matters we have to discuss.
The object of new Clause 8, which I and my hon. Friends have tabled, is to protect at least tenants with very low incomes from the effects of the Bill. Tenants have not yet realised what will hit them. The proposal in this part of the Bill is to take their dwellings out of their present rent control, whether they have a bathroom, lavatory and hot water put in in future, or even—and this is the monstrosity of it—whether they already have a bathroom and the landlord does not need to spend another penny.

Mr. Clegg: Is the hon. Gentleman saying that there is something wrong with a landlord who has provided a bathroom already?

Mr. Allaun: The answer is that that landlord has been receiving a controlled rent for his house. These provisions will be no incentive to him to put a bathroom in, because there is no need. The tenant will merely have his rent trebled for no advantage whatever.
If hon. Members opposite think that that is a good policy, I do not, and nor do the tenants. It means, on the admission of the Minister, an average increase in controlled rents of 2·6 times; in London, Southampton and Birmingham about three times; in certain cases four times; and if a bathroom is to be added to the house its value will obviously increase, so that it may mean even a fivefold increase in certain rents.
Under the Clause with which we are dealing, if the tenant protests, as he certainly will, the landlord will be able to take the tenant to the county court and say, "You must have a bathroom and even if it will treble or quadruple your rent". If the tenant objects he will be subject to eviction. I can see thousands of evictions arising from this.
My right hon. Friend the Secretary of State for Employment and Productivity produced a White Paper entitled, "In Place of Strife". It seems that another area of strife is to be created in housing. This will defeat the purpose of the Bill, which is to get improvements made. I warn the House that the Bill will bring the improvement of old houses to a halt, because tenants, while being agreeable to paying 8s. or 10s. a week for a bathroom, will not be prepared to have their rent trebled or quadrupled.
Our new Clause No. 8 is very modest. Its intention is to protect only the lowest paid people. It provides that
Section 56 of this Act shall have effect subject to the following provision:
A tenant whose earnings are less than £16 per week, according to income tax returns, or, if he has dependants, less than £16 per week plus 30s. a week for each dependant, shall be exempted from such an order.
The average wage of the industrial worker is £23 a week.
Let me take the case of a £16 a week worker. He probably has stoppages of

£2 a week. He takes home £14. Unfortunately, there are hundreds of thousands of such workers. Say that his rent for a house in London goes up from 25s. controlled to £4 5s. without a bath. When he has paid for his rates and heating, he will pay £6 a week out of his take-home pay merely for his housing. That leaves him with £8 a week. I wonder whether there are any Cabinet Ministers or hon. Members opposite who would be prepared to live on such a wage, or to have six-fourteenths of their income taken from them merely to cover their housing. Is £16 a week an unreasonable figure? Everybody knows that it is a very modest figure.
After banging the table in the presence of the Minister, we managed to get this "safeguard" inserted. It sounds wonderful; but it is not. The original Clause was very vague. It merely provided that the court had to take into account the means of the tenant. Knowing many of the legal gentry who have dealt with rent cases, this means that the tenant will get a very poor deal.

Mr. Clegg: Nonsense.

Mr. Allaun: Examine the results of the rent assessment committee in London. [HON. MEMBERS: "It was set up by the Government".] And I condemn them for doing it.
The Government's new Clause is very unsatisfactory. It fixes some security of tenure within the limits of rate relief—a single man earning £9 a week, and a married man earning £11 a week. There are very few working men getting wages like that. Few people will benefit except those on supplementary benefit. In fact, they are already covered, because they get supplementary benefit to cover their rent. This "safeguard" will not be much of a safeguard. There will be not merely thousands of rent increases, but thousands of evictions because the low-paid workers will no longer be able to pay the rent demanded when the Bill becomes law.
I expect that my right hon. Friend's objection will be the technical one that income tax returns are a year out of date. Not so. The P.A.Y.E. tax returns are contemporary. That argument falls, therefore. I am bitterly opposed to this aspect of the Bill. I regard the Bill as


a Conservative Measure in this respect. No wonder hon. Members opposite are rejoicing. This is a landlord's charter, but if new Clause 8 were accepted at least the lowest paid of our constituents would be protected.

Mr. Clegg: I cannot recognise myself in the description of the hon. Member for Salford, East (Mr. Frank Allaun) of hon. Members on this side falling over backwards in support of the Bill. Some important points of principle have arisen in the debate. The first was developed by my hon. Friend the Member for Hemel Hempstead (Mr. Allason) and was touched upon by the hon. Member for Salford, East and, in an interjection, by the hon. Member for Feltham (Mr. Russell Kerr), who has now left the Chamber.
This principle is involved in the proposition, as I see it which substitutes for the discretion of the county court judge a set of rules limiting his discretion in part. This sort of development has been going on ever since I came to this House in various Measures brought in by the Government. The Government seem to mistrust the courts to do justice. What they want to do—and I am sure the hon. Member for Salford, East is quite clear about it—is to substitute a very defined and restrictive judgment of this House for the broad discretion given to a judge.
This is dangerous, because it leads us into a law which has a rigid pattern which is a bad one. As a lawyer, I like to see a law where there is a broad discretion because, on the whole, one gets better justice that way. A judge can fit the circumstances to the case, whereas, if Parliament lays down a rigid path that he must follow, injustice can result.
I turn now to the question of rent assessment committees. Since the results began to come in, the hon. Member for Salford, East has not disguised his disgust for them. But to impugn the men who sit on these committees is wrong. To suggest that they were appointed by Tory councils and, therefore, fix unfair rents is a disgusting allegation which should be withdrawn. These men are doing a job and doing it well. Their terms of reference were laid down by the Government. They are doing their best to enforce them.
My expectations were different from the hon. Gentleman's. I did not think the system would work. I believe, however, that it is working. I thought at the beginning that it would be wrong not to have professional men to act as judges in these cases but men with general knowledge. I was wrong. The selection of men to serve as rent officers or on assessment committees has exceeded my expectations. They have brought a great deal of common sense to the job. Anyone who has taken part in an informal conference with a rent officer knows that it is not like going before a court where, unless one is legally represented or has advice, one is overwhelmed. This is a very friendly operation, and the rent officer usually leans over backwards to ensure that the tenant has a fair deal.

10.45 p.m.

Mr. Frank Allaun: I said nothing about rent assessment officers. I was referring to the members of the rent assessment committees, particularly in the three areas I mentioned, two of the three members in each case being chartered surveyors and lawyers. The hon. Gentleman cannot deny that the facts show that rents fixed in London are three or four times the rents of identical houses in other parts of the country. This means that the shortage factor is not being ignored, as the Act laid down. It is the rent assessment committees that I blame.

Mr. Clegg: The facts show nothing of the kind. If the rent assessment committees are not following the lines laid down in the Act, if they are putting the law at defiance as the hon. Gentleman suggests, there are legal remedies which he should pursue. Chartered surveyors are members of rent assessment committees. I have always felt that the tenant should have professional advice when appearing before a committee, and I hope that he does.

Mr. Deputy Speaker (Mr. Sydney Irving): Perhaps the hon. Gentleman will help me. I am not sure where this discussion is leading us. It seems to be leading us away from the new Clause.

Mr. Clegg: I hope not, Mr. Deputy Speaker. I was pursuing a point raised by the hon. Member for Salford, East.
We are talking here about a tribunal, the county court, which is having its discretion fettered by the new Clause, and,


in speaking of discretion, I am by analogy referring to rent assessment committees and rent officers. I have finished that part of my deliberations, but I felt that somebody should defend these people. It is too easy in this House to attack professional men. It is always happening, and I am getting sick and tired of it.
If I may move to the second and probably more important part of the argument, I will preface my remarks by saying that the hon. Member for Salford, East has for many years shown great interest and concern in housing and for those of his constituents who live in poor housing conditions. He is not the only hon. Member on both sides of the House to show this concern. We on this side have the same concern. My argument is not with what he wants to achieve. He wants to achieve decent housing conditions for his people; we on this side want to achieve the same; but our methods are different.
By new Clause 8 the hon. Gentleman seeks to ensure that a tenant with a low income will not be forced into paying a higher rent. The amount of the rent bulks large in the hon. Gentleman's argument. He has always maintained, and made no secret of it, that housing is a social service, and that the rent is of secondary importance, except that it should be well within the means of the tenant. How wide that attitude is I am by no means certain.
When landlords, be they local authority or private, are denied the means to maintain a house in a proper condition the result is housing decay and twilight areas. This frightens me, and the result of the new Clause will be that houses which should be put right for future tenants will not be put right because the means of the landlord are not sufficient to enable him to do so.
I accept, as the hon. Gentleman says, that there is little to spare at the end of the week for the housewife whose breadwinner is earning only £16 a week, with costs rising all the time. Only today we have seen the biggest increase in a month for a long time in the cost-of-living index.
But is it right to do it by denying the landlord a proper return? Is it right to deprive the landlord of the means of

keeping his house in good repair? We must think of the future. Is the proper way of dealing with the problem to attach a subsidy of sorts to the premises? If a person cannot afford to pay the sort of rent which will provide proper housing accommodation, he should be helped as a person.
If we accept the Government's Amendment, or the hon. Gentleman's Amendment, we shall make the situation worse, and, the further we go away from it, the more difficult is the remedy. While I appreciate the desire of everyone to get good housing, we have to face the facts. Unless money is put into housing which is obtained from the people who are living in the houses, we shall not get the houses that we want, and we shall not solve the housing problem.

Mr. Arthur Blenkinsop: I feel that there should be one voice from this side of the House which does not wholly agree with my hon. Friend the Member for Salford, East (Mr. Frank Allaun).
In these matters, we have a very difficult balance to hold. On the one hand, we want to protect individual tenants from the harsh effects of severe increases in rents. On the other, we want desperately to carry out the improvement of the properties involved, and unless there is some provision for that in the Bill it will not be done.
Everyone concerned with these matters knows that the provisions of the Bill are necessary to carry out the improvements to properties that we want to see. In those circumstances, how can we ensure that there is not unfair hardship on the tenants? I am afraid that my hon. Friend's proposals could have the opposite effect from that which he wishes to see. In some cases, it could be that properties that should be improved would not be.
Then there is the anxiety about the position of those who are in receipt of supplementary allowances. I assume that it will be possible for them to obtain increased allowances to meet any agreed rent increases imposed by an independent body. In cases where there is hardship, would it not be possible for the local authority itself to acquire the properties involved by compulsory purchase, and provide for rent rebates in cases where


it is desirable and suitable to meet the real difficulties of low incomes? Is that not an alternative means of meeting such difficulties?
There is a balance to be kept, and I believe that it is vital that we do not destroy the purpose of the Bill by removing too many properties from the improvements which we all know desperately need carrying out.

Mr. Maddan: It becomes increasingly clear that it would make good social and economic sense to prevent old houses from deteriorating. The idea of continuing to live year after year without basic amenities which can often be provided at no great expense is totally unacceptable today. Clause 56 has been included so that the court will have full power to give consideration to the tenant's circumstances and not allow something which will be a disadvantage rather than a benefit to him or which he cannot afford.
I will now tell hon. Members that I was paraphrasing some words which the right hon. Gentleman used during the Second Reading of the Bill. The proposed new Clause is an utter retreat from the principles he then enunciated. The hon. Member for Salford, East referred to the whole thing as "a landlords' charter", but, to use slightly stronger words than the hon. Gentleman, I would say it is not a landlords' charter but a charter for the perpetuation of squalor. Do hon. Members not know that what will happen is that many of the houses which it is quite improper for us to continue to tolerate will, in practice, have their slum conditions extended in time quite unnecessarily?
We must not forget Clause 56, for that gives the widest powers to the courts. I agree with the hon. Member for Salford, East in that I can imagine people in the most difficult circumstances such as he described. I do not think that the courts would fail to take account of the circumstances, and I say that in view of the provisions of subsection (4) of Clause 56. That enjoins the courts to have regard to all the circumstances, and any disadvantages which the tenant might be expected to suffer the accommodation available to him, and the increased rent which would result, and the way in which the increase would become recoverable.

Mr. Frank Allaun: Then if he was a county court judge, what would he assess as the standard below which a tenant should not have to go before his rent was trebled?

Mr. Maddan: I have been assured by the Treasury Bench that there would not be the slightest dilemma about this, and I have, naturally, accepted that advice. I think that I am right in continuing to accept it.
Another point which has been raised in this debate was that, during the Second Reading of the Bill, the Minister said—and I do not want to quote selectively, because I think that he saw the circumstances in which his new Clause would result:
Older people may have got used to a settled way of life, and in many cases it would be wrong to disturb them, but we should do everything we can to see that children and young people are brought up in better than 'sub-standard' conditions."—[OFFICIAL REPORT, 10th February, 1969; Vol. 777, c. 965.]
The Minister was referring to old people who are getting used to this way of life. A few "bob" more might bring them those little pleasures. If we have to have a new Clause, could it not be confined to old-age pensioners only, or people so long used to these sort of conditions? As it stands, the new Clause will drive a coach and horses through the purpose of the Bill in just those areas where we want improvements to be made.
11.0 p.m.
May we have some estimate of the number of properties which the Government expect to be affected by the Clause? Estimates have been given of the number which will be affected by the Bill, but how many will be taken out, as it were, by the Clause? If it is necessary to take out some for the sort of reason mentioned by the Minister on Second Reading, we could and should limit the number in that way.
I am not unsympathetic to the view that there are instances when exceptions must be made, but I rely on the court. It may be worth considering whether a limited and defined exception, such as old-age pensioners, should be provided, but I have grave apprehensions about a Clause as wide as this.

Mr. MacColl: I am anxious to help the House to reach a decision on the Clause. I remind hon. Members of its


comparatively narrow range. We are not talking about taking houses out of the Rent Act, or out of the improvement provisions, but dealing with the comparatively narrow problem of the landlord who cannot make the repairs without entering the house and who is refused the tenant's permission to go into the house, so that he has to obtain the court's permission to enter.
The different views were clearly deployed in Committee. When we presented the Bill to the House, our view was that the direction to the court—and it is a direction and not a pious hope—that it must consider the means of the tenant in relation to the increase in rent was a fairly firm protection and sufficient in itself to cover instances where hardship would be caused.
However, in Committee different views were forcefully advanced by my hon. Friends the Member for Salford, East (Mr. Frank Allaun) and the Member for Birmingham, Aston (Mr. Julius Silverman), who said that the court might not be clear about modern standards of the costs of living. It is arguable that the judge might think in terms of his youth when £16 a week meant that he was a rich man when he first earned that amount at the Bar. A judge has to be brought into the 20th century and we should ensure that he understands existing levels of income and expenditure.
We promised to look at ways in which we could convey that to the court. That we have done, and we found difficulty in defining a provision sufficiently specific to have some meaning, but not so peremptory as to become a direction to the court about what it must do in minute detail. We came to the conclusion that we should use a gate through rate rebates, so that if there were a rebate, the landlord would be unable to get a compulsory order. It has been suggested that the number of people affected by rate rebates is very small. In fact, about 50,000 private tenants are affected, apart from a number of owner-occupiers. I point out to my hon. Friend the Member for South Shields (Mr. Blenkinsop) that people on supplementary benefits would receive assistance. These would be the people who would be protected.
Let us compare the two proposals. My hon. Friend's tariff is higher than ours and, except for large families or where there are very heavy rates, people would be caught by his criterion who would not be caught by ours. Secondly, he proposes to put into the Bill a firm figure. If levels of money incomes rise, £16 a week may well become trivial as a proportion of income, and it may be very complicated to alter the figure in the Bill. The rate rebate figure, on the other hand, is in my right hon. Friend's hands, and he can make an order to vary it. He has already altered it once, which shows that he takes the responsibility seriously. Clearly, it is a more flexible instrument.
My hon. Friend mentioned the problem of eviction. My hon. Friend knows, and I will not imply that he does not know, that the people concerned will remain under the Rent Act and will have the security of the Rent Act. They will have both the basic and the detailed protection given to tenants under rent control. It would not be possible for a landlord without a court order to evict someone who had failed to pay his rent. The landlord would have to go to court and to justify his request. It is highly unlikely that a county court judge would make a peremptory eviction order if it were clear that the rent was beyond the tenant's means.

Mr. Frank Allaun: I do not want to detain the House unduly, but this is a most important point. Let us consider the circumstances in which the tenant is taken to court by the landlord and his rent is trebled. He says, "I cannot afford to pay that rent and I will not pay it". He is then taken to court for an eviction order. Is my hon. Friend suggesting that the landlord will not get an eviction order? Of course he will, because the court has instructed that the improvement should take place and that the rent should be trebled.

Mr. MacColl: It would not be part of the same operation. There would be an order for entry and then, if there were rent arrears, there would have to be a request for another order. I will not speculate on what a judge would do, but I think that in most cases a judge would take a very sympathetic view of the situation and would make an order for the payment of arrears by very small amounts.


I do not think that judges lightly order evictions.
May I inform my hon. Friend the Member for South Shields that under the law the local authorities can acquire property compulsorily for improvement. This is a difficult problem of holding the balance between the different views we have heard tonight, the views of the people who say that the improvement of the property is so essential that we must put that first, and the view of my hon. Friend that this could be a most dangerous instrument.
What we have done by this provision is to give a direction to the court to have regard to the means of the tenant in relation to the increase in rent. We are adding a complete shut-out of anybody who is getting a rate rebate who cannot be considered at all under the order.

Mr. Peter Walker: I do not like the Government's new Clause, and even less do I like the new Clause moved by the hon. Member for Salford, East (Mr. Frank Allaun).
I cannot understand why the hon. Member for Salford, East and those who support his views are so proud of their achievements over the years in maintaining rent control at the artificially low levels at which it has been maintained. They are all aware of the derelict, badly repaired houses that stand as a monument to the absurdity of rent control as practised by Governments past and present in this country. To be proud of that system, to wish it to continue, and to look upon it as a system in the interests of the tenants is a remarkable blind spot of the hon. Member for Salford, East.
The hon. Member wishes the House to accept a new Clause which will allow tenants living in badly repaired houses, without proper facilities, to opt out of having their houses properly repaired, with proper facilities. All he will achieve, if he is successful, will be that many houses will continue to provide appalling conditions for the men, women and children who live in them. If that is what he calls Socialism and social reform, I think very badly of it indeed.
I would remind the hon. Member, and the Minister because his new Clause has some adverse effects on the situation, that on the Second Reading of the Bill the Minister, now accused by the hon.

Member for Salford, East of producing a landlords' charter, said:
Let me remind hon. Members what controlled rents are: they are basically twice the 1939 letting value of the house. They have not moved at all since 1957, while costs in general and repair costs in particular have been steadily moving up. Indeed, during this time the average male earnings have nearly doubled, and the cost of repairs has increased by over two-thirds. There seems little doubt that these 1957 rent levels have meant in many cases that repairs have been neglected."—[OFFICIAL REPORT, 10th February 1969; Vol. 777; c. 972.]
Those are the words of a Socialist Minister of Housing on the Second Reading of the Bill. It is staggering that hon. Members on either side of the House should dispute those views of the Minister.
The Minister then went on to describe the landlords, the people for whom the hon. Member for Salford, East says the Minister is producing a charter. In view of what the Minister said, landlords are not all that evil a group of people to produce a charter for—

Mr. Frank Allaun: Some of them are.

Mr. Walker: Of course, some of them are, as some tenants are. In any group of people there are bad and good. And I hope that both sides of the House are against bad landlords and tenants.

Mr. Allaun: The point is that, as the hon. Gentleman knows, there are thousands of controlled houses which are being well-maintained, which have bathrooms and where the landlords are not losing on them. I do not see why one should give them such a bonus at the tenants' expense.

11.15 p.m.

Mr. Walker: I find it incredible that the hon. Member should wish to maintain rents at a level fixed at 1957 levels—and even then they were not properly adjusted on their pre-1939 levels. Of course, there are landlords who have maintained their houses properly because they can afford to do so, and they have lost money, as the hon. Gentleman knows full well. He should look, if he wants a comparison with controlled rents, at the economic cost of council houses. Even with all the subsidies on council houses, their rents are far above those controlled rents.
Let us look at the description of the landlords concerned. This is the description given by the Minister as a result of a study of five surveys. There are some who take a Left-wing view of politics and some who take a Right-wing view, but here is the Minister's analysis:
I can perhaps summarise them best by saying that they show a range of individual landlords owning one rented dwelling as being between 61 per cent. and 78 per cent. of all landlords.
So the first description of the analysis is that between 61 per cent. and 78 per cent. of all landlords are landlords of only one house.
The analysis goes on to say:
And the proportion of individual landlords who are elderly ranges from 39 per cent. to 63 per cent."—[OFFICIAL REPORT, 10th February, 1969; Vol. 777, c. 972–3.]
The majority of landlords are those owning only one house and between 40 per cent. and 60 per cent. are elderly. These are the people the hon. Gentleman is saying should subsidise low-income tenants. [Interruption.] He cannot deny that.
We have reached an absurd position when the House passes legislation saying that a group of people, most of whom own only one house, probably half of whom are elderly, should bear the brunt of subsidising the accommodation of those on low incomes. To take it a stage further, the hon. Member for Southall (Mr. Bidwell) should say that those on low incomes should opt out of the position at the expense of the landlord and create a situation where the landlord does not have to keep the houses in repair, or to provide the proper amenities which we should all like to see and, if he is successful, people will continue to live in the most dreadful and deplorable conditions.
It is time that civilised society came to the conclusion that one should not pick on one group of people to subsidise the accommodation of another group. If one has a society where a proportion of people as defined by a Labour Government cannot afford fair rents, it is the duty of society to see that they can afford them, but it is not the duty of Government to say that the landlords should be stopped from obtaining the fair and proper price for that accommodation. I am surprised that the hon.

Gentleman should remain in the position of wishing people to go on living at low rents in appalling conditions.
We advocate that fair rents should be paid. If they cannot be afforded—and in a minority of families, they cannot—it is the duty of society to see that a fair rent is paid one way or another. There are powers under which local authorities can take leases of privately rented accommodation, and under these powers they have to pay the landlord a fair rent and can give the advantage of rent rebate to the tenant. We would like to see more local authorities practise that, where tenants are unable to afford a fair rent for privately rented accommodation.
At present, there is a situation where those who own houses are those affected. It is an absurdity and almost wicked. The hon. Gentleman is not, of course, intentionally wicked—I recognise that he genuinely wishes to improve housing conditions—but the policy he has advocated for decades, and which he still pursues, would mean appalling conditions for tenants.

Mr. Hawkins: I appreciate the enthusiasm of the hon. Member for Salford, East (Mr. Frank Allaun) for the improvement of housing, but his other enthusiasm lies in the direction of not allowing people to have reasonable rents and so be able to do the improvements.
The two enthusiasms conflict. Acceptance of the hon. Member's proposal would mean that the desperate need to improve certain houses would not be met. In an area where an improvement scheme has been carried out, it is bad to have some houses standing out like sore thumbs, and for their next occupiers to find that necessary repairs and improvements can be carried out only at a far greater cost than would have been the case earlier.
Many of us can remember that when electricity and water were laid on in a given area there were always some people who wanted to live as before. We later realised what a mistake it had been not to have insisted on those houses being improved. One needed houses in good condition, but those properties were in bad condition, and their occupiers complained about the lack of water and electricity. If the hon. Member's proposal were accepted, that sort of thing


would happen again. I heard what he said about chartered surveyors—I am a chartered surveyor—but I take his remark with a pinch of salt. He had to introduce that note. The rent tribunals and other bodies are doing a good job, and acting as fairly as possible.
There is much in what the hon. Member said about the impossibility of the low income group paying some of the increased rents that may be asked. In the Eastern Counties we have a very low wage pattern, being dependent, as we are, on agriculture. Quite a large number of people will be earning less than £16 a week. There must, therefore, be some way of enabling them to pay less rent, but the way to go about it is not to condemn them to live and bring up families in appalling housing conditions. We must improve the houses, but we must also see to it that such people have enough income to pay increased rent. It should not be beyond the wit of the Government to find some way round the problem other than that suggested by the hon. Member.
The great thing about the Bill, which I have supported from the very beginning is that we shall get improved and brought to modern standards a larger stock of older houses which are sound in themselves. I believe, with many hon. Members on both sides, that bad housing conditions are the greatest breeder of all sorts of crime—

Mr. Deputy Speaker (Mr. Sydney Irving): Order. We cannot have a Second Reading debate on the Bill itself, rather than on the new Clause.

Mr. Hawkins: The Bill will help to improve housing conditions, but the hon. Member's proposal would be bad for the country and its stock of housing by allowing people to opt out of having their housing conditions improved. There are many people living on low incomes who must be helped, but I do not believe that this is the right way to do it.

Mr. Eldon Griffiths: I should think that Clause 56, as it stood, was sufficient to cover this problem. I am sorry that the Minister—no doubt in response to representations that have been made to him—has felt it right or necessary to bring in new Clause 4. I think that it is wrong in

principle and likely to be unworkable in detail.
Like my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins), I represent a constituency with a large number of houses in small villages, many of which were put up in the early part of the Industrial Revolution and are now in deplorably bad condition. In those houses live elderly retired farm workers and the widows of farm workers, people whose incomes are tiny, whose savings are nil, and who really are the rural poor.
Hon. Gentlemen opposite frequently speak of the poor in the great conurbations of the country—in my youth I saw much of those poor—but I hope that they will accept that there is a category of people in our land, the rural poor, who are frequently very poor indeed and whose housing conditions are extremely bad.
I support the main principles of the Bill and of those Acts that have gone before, because they enable improvements to tens of thousands of houses—

Mr. Deputy Speaker: Order. The hon. Gentleman is going very wide of the two new Clauses that we are discussing at the moment.

Mr. Griffiths: I was establishing my broad firmament in order to converge on the two new Clauses, to which I am about to come. I was simply establishing that my reason for speaking on the new Clauses is because I represent an area that has many rural poor living in small cottages that are badly in need of repair.
Parliament has willed that these properties shall be improved so that the squalor shall be reduced. If either of the new Clauses is accepted by the House, we shall find that one group, and one group only, of our fellow citizens would effectively be contracted out of the process that Parliament has willed.
Landlords may not opt out. They are required by law in many cases to make the necessary improvements. The vast majority of our fellow citizens, who are unfortunate enough to live in poor houses, may not opt out. But if either of these new Clauses is passed, one group alone will contract out. Under new Clause 4 those contracting out will be people on rate relief. Under new Clause 8 those contracting out will be those with an income of £16 10s. a week or less.


The idea of both new Clauses is that these people—happily, a minority—should go on living in squalor.
On behalf of those in my constituency who are living in squalor, I protest at the very suggestion that they should continue to live in the decrepit cottages in which they now live.

11.30 p.m.

Mr. Frank Allaun: Trebling their rents.

Mr. Griffiths: I did not hear about that. That is for the court to decide, in accordance with the Minister's new Clause. It gives the court ample scope to consider their means and their circumstances, and I refuse to believe that a court confronted with the Minister's Clause would in any circumstances treble their rents, unless their rents happen to be so low that trebling them would not materially affect their circumstances. The hon. Gentleman knows that, and so does the Minister.
My point arises principally from my experience, and I should like to give a precise example to illustrate how difficult it may be for the Minister's Clause to work in practice. I refer the Minister to the small village of Long Thurlow, not far from Bury St. Edmunds. Only last week I was approached by a constituent, an elderly lady of 71, who lives in a small former agricultural cottage in a road of houses which are perhaps 100 years old.
Until recently none of these houses had running water or adequate sanitation. The rent is 11s. 6d. a week, and of that sum the rates consume about 5s., so the landlord receives 6s. 6d. a week for each cottage. Due to the generosity of the State, the landlord, a small man, has been able to obtain the standard grant and the discretionary grant up to a certain figure, and one by one he is improving these cottages in the terrace. So far he has improved six out of the 10. The seventh cottage along the road is occupied by the elderly lady to whom I have referred.
The landlord is now seeking power to improve her cottage. She wrote to me asking me to visit her because, she said, "I will not move. I will not move out to have the improvements carried out", even though the landlord, who is in receipt of what no one can describe as a

princely sum, has offered her an identical home alongside her own which he has improved within the last three months. She will not move from her home to an identical house next door, except that it now has a bathroom and other facilities, thus making it impossible for the will of Parliament to be carried out.
It must be wrong for such a situation to be allowed to continue if the will of Parliament is to mean anything at all. I believe that if Clause 56 had been left alone there would have been no difficulty. The landlord would have been able to obtain a county court order, the lady would have moved without much difficulty into the empty premises next door, and the job would have been done. My fear is that if the Minister's Clause is enacted this lady will not move, and she will not have to move because the rates on her property fall below the limit which the Minister has put forward. As a result of his Clause the Minister will make abortive what he is seeking to achieve, and what we all give him credit for seeking to achieve.
I would ask him to consider very carefully whether his new Clause will achieve the purpose he is seeking. It may be that the example I have given is an exceptional one, but I do not think that it is very rare in West Suffolk. I hope he will consider carefully, between now and the final passage of the Bill whether he cannot make some change that will cover the sort of cases that I have put to him.
I must comment on some of the details of the new Clause 8, moved so eloquently by the hon. Member for Salford, East (Mr. Frank Allaun). I am bound to tell him that £16 a week in West Suffolk and much of East Anglia would be regarded as a very good income indeed among our farm workers. I say that to illustrate that it is impossible to establish across the whole of a very diverse country such as ours one single figure. What £16 a week means in West Suffolk and what it means in the hon. Gentleman's constituency are two very different things.
The hon. Gentleman would be importing into legislation a notion that would involve Parliament, almost every year, in coming back and changing the arbitrary figure that he is asking us to accept. There is a vast difference between what


£16 a week means in one part of the country and another. It would be very ill-advised to confine us to that figure. There is a good deal of difference between £16 in 1969 and £16 in 1974 or even in 1964. If the change in the value of money continues at its present rate then the figure would need to be revised again and again.

Mr. Frank Allaun: indicated assent.

Mr. Griffiths: The hon. Gentleman nods. Clearly, when framing his new Clause, he had this in mind and wanted the principle to be debated, and that, at least, he has achieved.
I will give a positive example. I have in my constituency a man who has 13 children, and one, as he puts it, "in the oven". On the basis of the new Clause 8, where each dependant would have an additional 30s. per week, this particular and prolific gentleman would have to have £16 per week plus 13 separate 30s. I make his income to be not less than £36 under the hon. Gentleman's new Clause. He may well need it, indeed his expenses are high, but it will be clearly understood that with an income of that kind, and possibly with efforts of that kind required as well he has no time to go out to work—perhaps he works at different times of the day from Members of Parliament.
I point to this exceptional example to demonstrate the dangers of laying down in legislation these kinds of precise figures. The hon. Gentleman's new Clause would mean, in the case of this gentleman, an income of £36 a week, which is a very different thing from what the hon. Member intends. [Interruption.] The hon. Member for Penistone (Mr. John Mendelson) is evidently feeling the strain of being here so long. He is much more active on the question of Vietnam than he is on matters pertaining to my constituents. My concern is more with the village of Long Thurlow.
I have made the two main points I wished to make on new Clauses 4 and 8. But I do not believe that it is sufficient for anyone to oppose what the Minister and the hon. Gentleman hope to do unless he can say how he would do it himself. Clause 56 would suffice to cover the problems they have raised. The Government have got themselves into a jam, and under pressure from the hon. Gentle-

man and his friends they have sought to meet his argument. The difficulty is that since his argument is bad any concessions the Government make to meet him are bound to be bad.
What is wrong with both the Clauses is that they are based on the assumption that a minority of people, mainly the elderly and poor, shall be permitted and indeed encouraged to live in conditions which the rest of us regard as wholly unacceptable. If social welfare in the eyes of hon. Members opposite means that a number of people shall live in slums, I do not recognise the idealism that many of them have sought to stand for.
By far the better approach would be to tie the help in our housing programmes not to the bricks and mortar, but to the human being. Hon. Members may contend that this involves a means test, but how can the hon. Gentleman's new Clause be described as anything else? He is establishing his means test at £16 a week. The Minister has established his at a rateable value of £3 10s. every six months. What an extraordinary approach this is!
Of the two Clauses we are discussing, I am sure that the Minister's is the better. That tabled by the hon. Gentleman, whose sincerity and compassion we all appreciate, is misconceived and should be thrown out right away. The Minister's has a number of holes in it. Its philosophy is wrong and its approach is mistaken, but if the Minister succeeds in getting it I hope that he will look at the detail that I have put before him in respect of the rural poor.

11.45 p.m.

Mr. Murton: The debate is very interesting, but in many respects it is rather strange, because the Minister must admit by now that it was probably folly of him to let his heart over-rule his head to the extent of producing new Clause 4. It can be well understood that it is a compromise between Clause 56, which was carefully and tightly drafted, and the rather more radical approach of the hon. Member for Salford. East (Mr. Frank Allaun) and his friends. Like many other compromises, it fails to meet the case.
The difficulty is that it produces rigidity. Although I am not a professional man, I think that it is always wrong that rigidity should be introduced


into a court of law. A county court judge who is called upon to deliberate on this Clause will find his hands tied. This is a wrong principle, because the judges are perfectly able to consider all the facts. It is wrong that they should be debarred by a Statute passed in this manner. The Minister must admit that his party is a party of rigidity. This is the cause of much of the trouble which has dogged right hon. and hon. Members opposite. [An HON. MEMBER: "Rigor mortis."] That may be slightly unkind, but it is perfectly true.
What worries me particularly about new Clause 4 is that those people to be protected by it inevitably will live on in the house in its present condition. Two inevitable facts will arise should it not be possible for the local authority to re-house them. First, they will continue to live in extreme discomfort. The elderly are probably better acclimatised to living in something they have always known as extremely uncomfortable. They will be condemned to doing this by the Clause. This is inhuman because they will never have the opportunity to know anything better.
Secondly, if they are condemned to live on in their house in its present condition until the end of their days, it is conceivable that by the time they have unfortunately passed on the house will be so badly out of date and out of repair that it will be lost to the housing stock. The Minister for Planning and Land, who, I am pleased to see, is listening to me, talked about the possibility of a crude surplus of houses by the 1970s. I fear that houses of this type will be some of the more crude ones. They will mitigate the effect of obtaining a surplus. This is much more serious than people realise. There must be many houses which will fall within this new Clause. The Minister must be wondering whether it was wise to compromise.
I understand the views of the hon. Member for Salford, East on housing. In many ways, he is quite a character—he will not mind my saying that—in housing matters. He would, no doubt, talk about the wicked landlords and the other things which delight his heart. But I know that behind that facade there is a warm heart. I understand the way he feels—and I have told him that many

times. In my youth—[Laughter.] The hon. Member for Penistone (Mr. Mendelson) laughs. I was young once. In comparison with his, my youth may be blooming; I do not know.
The hon. Gentleman must not laugh at me when I say that I have known and lived amongst slums and squalor, because I have, just as anyone else who was born and brought up and has worked on Tyneside has. For that reason, I sympathise with the hon. Member for Salford, East. In attempting to express my sympathy with him, all I get is unjustified sarcasm. I can only put it down to the lateness of the hour and I shall, therefore, forgive the hon. Member for Penistone on this occasion.
Having said that, however, I realise why the right hon. Gentleman has refused new Clause 8. I saw him move out of his seat to explain his reasons personally, I think, to the hon. Member for Salford, East. Notwithstanding the right hon. Gentleman's view, the important issue here, cogently put by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) and my hon. Friend the Member for Worcester (Mr. Peter Walker) is the whole question of subsidy to the individual. I am certain that, when we return to office, we will so alter and organise affairs that we do not have the type of compromise which I fear is going into the Bill now.

Question put and agreed to.

Clause read a Second time and added to the Bill.

Further consideration of the Bill, as amended, adjourned.—[Mr. Greenwood.]

Bill, as amended (in the Standing Committee) to be further considered Tomorrow.

GURKHA BRIGADE

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Miller.]

11.52 p.m.

Mr. James Scott-Hopkins: This is a short debate in which to cover a very important subject. I emphasise that I wish to do nothing and say nothing which will do any harm to the Gurkha Brigade or its future. What


I hope to do is strengthen the intention to hold the Brigade and maintain it and ensure that it plays a significant rôle in the future defence of our country and of the free world.
The background to the debate can be described in three parts. First, there is the appalling shortage in the strength and recruitment of the British Army. We are 10,000 men short—there is no denying that. Secondly, there is the intention of the Secretary of State for Defence to change the basis of recruitment of British officers to the Gurkha Brigade from that of regular officers who join the Brigade and stay with it as a career to a system of short-service officers going to the Brigade for a limited time or of officers transferred for a short period from the Regular Army to the Brigade. Coupled with this is his intention to cut down the strength of the Brigade from 10,000 to 6,000 men.
Thirdly, there are the views reported in the Sunday Telegraph on 18th May as having been expressed by the Prime Minister of Nepal. There is no confirmation of the report and I suggest that several parts of it are quite exaggerated. A certain disquiet is expressed by His Excellency the Prime Minister about the sons of Nepal serving foreign powers overseas. I was glad to see in this report by the Sunday Telegraph reporter that the Prime Minister had every intention of honouring the treaties and agreements between our two countries, and that there will be no change in the near future.
I have tried to find out from the Library under what treaties we have the right and ability to recruit Gurkhas, but I have been unable to do so. All I can find is a statement made in 1948 by Lord Alexander, as he now is, the Minister of Defence in the 1955–60 Tory Government.
The future of the Brigade must be viewed in the context of what the Government are saying about withdrawing from east of Suez and from the Far East in 1971. I gather it is intended that the Gurkhas should stay in Hong Kong. Whether the intention is to keep the whole of the reduced Gurkha Brigade there I do not know, but a fair proportion will be in that area. The Government intend to keep a presence in the

Far East under our obligations to be available should the necessity arise.
What is the rôle of the Gurkhas? They will certainly be in Hong Kong, but of itself that does not justify the keeping on of the Gurkha Brigade. I had the honour to serve with the Gurkha Brigade during the war and after, and I know what splendid men they are. Few would disagree that they are among the finest fighting men in the world today.
The Gurkha can adapt himself to any condition—mountain, plain, heat, cold, mud, dust. This was shown in the First World War and the last war and in the various encounters since, in Malaysia, and in the confrontation in Indonesia, and so on. He is an extremely brave man who can endure enormous hardship, and his humour and courage are an absolute by-word wherever soldiers are. Last but not least is his loyalty, to his own country, to the British Crown, to his officers and to his regiment. This is something which is perhaps lacking in the national life of this country at the moment.
Surely, if a rôle can be found for him, in addition to Hong Kong, it would be foolish not to employ him. I believe that there is a great deal that could be done by the Gurkha Brigade. Gurkhas are still welcome in Malaysia and in Kuala Lumpur where the base camp is. This is in the short term.
In the future I hope that the Brigade will be based partly in Australia, not necessarily as part of the Australian defence forces, but working in close co-operation with them and with our own maritime forces in those waters. These maritime forces will undoubtedly be strengthened when a Conservative Government returns to power. There is also the possibility, as happened a year or two ago, of a battalion spending time as part of our strategic reserve at home. Perhaps a company might even become part of the S.A.S. Why not? It would not be possible to find a better soldier to carry out the duties which the men of the S.A.S. are asked to perform.
It is possible to think of an enormous number of rôles which the Gurkha can play, if he is allowed to serve west of Suez, and provided the Government negotiate with Nepal and with Australasia.
There are three problems. The first is, do we intend to maintain a sufficient force of Gurkhas? I do not think that we do. Simply cutting the Brigade from 10,000 to 6,000 is a great mistake, and the Under-Secretary of State knows my views about it. At any one time, a quarter of the strength of the Brigade will be on leave. Nepal is a long way from Katmandu, and the normal leave period is one of six months to justify the long journey from Katmandu to the hills of Nepal. At any one time, there will be far fewer than 6,000 troops serving in the Brigade.
In any event, we shall be cutting down on a great many of the ancillary services because, if there is to be a cut from 10,000 to 6,000, not only will the fighting strength be cut but, presumably, the technical units which support it. It means that there will no longer be a group which is able to go into action as a combative whole at any one time.
The second problem concerns British officers. The Under-Secretary of State was good enough to write to me explaining his ideas about reducing the permanent cadre of regular officers. I regret this, but I accept that it is necessary if the strength is to be reduced to 6,000. The cadre would be too small to provide a reasonable career structure to a regular officer joining it, and therefore the Brigade will have short-service commissioned officers or officers who have been transferred.
However, I must warn the hon. Gentleman of the difficulties which lie ahead. It takes months to learn the language. I am fairly good at picking up languages, but it took me a long time to learn Khaskura. It must be learned for an officer to be able to command troops in the field and if there is to be confidence between him and his men.
In addition, it takes time to acclimatise oneself not only to the heat and cold but to the customs and habits of the Gurkhas, splendid people though they are. It is wrong to think that the future will be easy, but I accept that the Government's decision is necessary given a force of 6,000 men. However, that is perhaps yet another argument for keeping the strength up to 10,000-plus. In that event, it would be possible to provide regular officers with a reasonable career

structure. In my view, it is essential to have long-service officers serving in the Brigade. The senior majors and colonels should have served a long time with Gurkha troops so that the men will come to know, trust and love them.
I turn finally to what is perhaps the most difficult problem of all, and here I refer to the attitude and feelings of the Nepalese Government. After all, it is their decision, which is final, as to whether or not we have a Gurkha Brigade and have 10,000, 6,000, 2,000 or 1,000 men in the Brigade in the future. That is why I was glad to read that the Prime Minister of Nepal confirmed his intention to honour existing treaties and agreements with this country. We have had treaties of friendship with Nepal for over 200 years, and we have been recruiting her sons for over 100 years.
It must not be forgotten, however, that it is not the British Army which is recruiting most of the Gurkhas today. The Indians recruit many more. We have four battalions, whereas the Indian Army has something like 40, together with ancillary troops. My own regiment was handed over to the Indian Army and today is serving it honourably.
It is unthinkable that anything should occur which might break the treaties between the two countries. But I can understand the misgivings of the Nepalese Government. Naturally there are anxieties when a great many of Nepal's sons serve in any foreign army in an alien land. But India is taking most of them, and not us.
Again, it has not helped matters that there has been so much chopping and changing of policies. What do the Gurkhas and the Nepalese Government see but chop, chop, chop all the time? They see the British Government drawing out of the Far and Middle East and not honouring its treaty obligations in those areas. What a tragedy it all is. I hope that when we are returned to power after the next election—and I can only hope that that will be soon enough for our friends—these good friends of ours will listen to what we are saying. I only hope that in the meantime they will not be panicked by anything which this Government says, but rather that they will retain their friendship with this country and believe that when we are returned we shall honour our obligations


in the Far East and maintain in that area something which is meaningful.
Over and above that, we have said that we shall recruit up to 10,000 Gurkha troops, for we can do with every single friend we have got at this moment of time. I hope that we shall be able to negotiate with the Australian Government and the Nepalese Government in a tripartite way, for we want the Gurkha soldier who has been our friend for so many years. It would be an awful tragedy if this friendship came to an end and this long friendship with the British Army was prematurely finished.
I do plead with the Government to change their mind and to move towards the kind of policy which I believe we shall introduce when we return to power, for it is so important not only for this country but for the Near and Far East. This is what is needed. The Gurkhas have an enormous part to play in the defence of this free part of the world.

12.8 a.m.

The Under-Secretary of State for Defence for the Army (Mr. James Boyden): I appreciate the interest of the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) in the Gurkha Brigade, and also his record with it. I join in the tribute he paid in praising the quality of the Gurkha soldiers. The Government fully appreciates the splendid military characteristics of the Gurkhas and their record of loyal service to this country over the last 150 years as part of the Indian Army until 1947, and since then as part of the British Army. They have proved their courage and loyalty in both world wars, and in many other campaigns all over the world. Theirs is a record of which we and they can be proud.
Proposals to reduce the strength of the Brigade of Gurkhas were made in 1963, when the Brigade had a strength of about 14,600 men, and the then Government—a Government of the hon. Gentleman opposite—announced their intention to reduce the Brigade to 10,000 men. The basic point is that the Gurkhas could not be exempted from the reductions being made in the strength of the Army generally, and in 1963 the then Conservative Government announced their intention.
However, due to the confrontation campaign in Borneo, it was not until 1967, when the confrontation had ended, that we were able to put into effect what were, in fact, plans formulated by right hon. Gentlemen opposite. In other words, what we did in 1967 was to carry out the declared policy of our predecessors, and perhaps I might say here that it would appear that on this point at least, we and hon. Members opposite, are in agreement. I think that most hon. Members opposite are not in agreement with the hon. Gentleman, but the fact is that we put the plans into effect, and the Brigade will be at a strength of 10,000 men at the end of this year.
As the House knows, we re-examined our defences at the end of 1967 in the light of the imperative need to make further savings and decided to withdraw our forces from east of Suez, except Hong Kong, by the end of 1971, a decision which the hon. Gentleman deplores.
This decision led us to make further economies by reducing our forces in line with the reduction of our military commitments. As my right hon. Friend announced on 16th January, 1968, a part of the reductions in the Army has to be borne by the Brigade of Gurkhas, which is to be reduced to a strength of 6,000 men by the end of 1971. The Brigade will then consist of four battalions, one from each of the four regiments of Gurkha Rifles with their associated headquarters and supporting arms and services, as the hon. Member knows.
This force will be based in Hong Kong as part of our continuing garrison in the Colony. As the hon. Gentleman knows, the Gurkha units played a good part in the preservation of law and order during disturbances in Hong Kong in 1967. I was able fairly recently to meet a considerable number of Gurkhas in Hong Kong and I talked to them about the part they had played in the riots and disturbances, about their future and other matters.
One cannot fail to be impressed by their cheerfulness and, although one does not see their courage exhibited in that sort of visit, one knows about their courage and general extremely good military qualities. I had a very interesting session at the jungle warfare school just outside Singapore.
When my right hon. Friend the Prime Minister made his announcement, he also stated that the future of the Brigade after 1971 would depend on conditions at that time. I should like to make it clear that that is still the position. We have made no decision about the Brigade of Gurkhas after 1971 and we do not expect to decide in the near future.

Mr. Scott-Hopkins: Does that not make things even more uncertain? Will not the hon. Gentleman say that while he may have no plans for increasing the Brigade, at least it will stay as it is?

Mr. Boyden: I think that my statement is reasonably clear: we have not reached a decision. We have made the position up to 1971 clear and that is where we now are; there is no advance on that. There is no need for a decision yet and it would be premature to come to a decision at this moment.
The hon. Member referred to statements which have appeared in a newspaper. As I told the House recently, my right hon. Friend the Minister of Defence for Administration has been three times to Nepal to discuss Gurkha affairs with the Government there and has discussed matters which were relevant to the Brigade and the welfare of the Gurkhas and, of course, our own Government. As a result of my right hon. Friend's visit, I can assure the House that the Government of Nepal is fully aware of our plans for the Gurkhas and is satisfied with our methods of reduction. On day to day affairs our Ambassador in Kathmandu and the Major-General, Brigade of Gurkhas, keep in close touch with the Nepal Government about the welfare of Gurkhas.
I should like to make it clear that reductions in the Brigade are causing no hardship to the Gurkhas themselves or to Nepal. We decided that the reduction should be at the rate of 2,000 a year, which is well within the ability of the economy of Nepal to accept, and the Gurkhas made redundant are receiving compensation with which they are well satisfied. I was assured of this by personal contact when I was in Hong Kong.
All Gurkhas returning to Nepal are given resettlement training on their discharge and that helps them to return to

civilian life. In addition, my right hon. Friend the Minister for Overseas Development is establishing training schemes which will give more advanced training to many from among the retired Gurkha soldiers. Thus there is the Army resettlement scheme, which is being developed and improved all the time and which my right hon. Friend has seen fairly recently, and the Ministry of Overseas Development schemes being developed for some servicemen. They are both helpful to the general economy.
In the meantime, we are continuing to recruit to maintain the strength of the brigade at 6,000 and recruits are coming forward as they have always done. We recruit Gurkhas under the terms of the Memorandum of Agreement of 1947 and its associated documents, which govern the recruitment and terms of service of the Gurkhas. These continue to work satisfactorily. No suggestion has ever been made to the Government that the Nepalese wish to terminate or to alter the agreement. Either side can open negotiations to alter it, but no representations have been made to the Government about that and the 1947 Agreement still stands.
One argument which has often been used is that the cost of the Gurkha troops compares favourably with that of British troops, although the hon. Member did not raise that point and he obviously does not wish to press it. One needs to consider all the facts involved. Having Gurkhas in Hong Kong is cheaper to the British Exchequer than having United Kingdom troops there, but if Gurkha troops were to be used in other areas the cost would move very much in the same direction as in the case of British soldiers. A Gurkha battalion in Europe or in Britain would cost slightly more than a British battalion. I do not press that comparison, but I state the point because sometimes it is distorted.
There is a political difficulty, with which Mr. Profumo dealt in 1963, which is always present—the fact that Gurkha troops are not completely ubiquitous as are British troops. There are certain parts of the world where, for social or religious reasons, we should wish to use British rather than Gurkha troops in certain instances, and that is a limiting political and military factor in their employment.
I have been asked about the size of the brigade. Our policy is to concentrate the brigade in Hong Kong so that we have the benefit of Gurkhas being nearer Nepal and also being engaged in their most useful deployment in the situation which exists in Hong Kong. We plan to keep about 6,000 there. If we had more, it would exceed the requirement of the Hong Kong garrison, and we have no requirement at the moment for keeping more than that number in Hong Kong.
The hon. Member suggested that because recruiting is not as good as we wish it to be, that is an argument for increasing the number of Gurkha troops. It is true, as I admitted in the Estimates debate, that recruiting has been disappointing, but we do not expect that situation to continue. The optimistic forecasts which I made fairly recently, and which were perhaps rather scorned by the hon. Member, appear to be coming true. In the last few weeks we have improved nearly all our recruiting, and we hope that further steps in the near future will bring it back to a satisfactory level. I know that the hon. Member hopes that that will be so even though he has to make political speeches on the subject.
I was asked about officer recruiting, and I am grateful to the hon. Member for what he said about my writing to him on the subject. We both understand that a very small number of regular officers will be required for this purpose in the future. By the end of the year three young officers from Sandhurst will be the last Regular young officers to go on a permanent basis to the Brigade of Gurkhas in Hong Kong. As the hon. Member said, it is a narrow career now, with geographical and operational limitations, and therefore we think it right—I think he agrees—that we should cease to commission British Regular officers into the permanent cadre of the brigade after the end of this year.
Those who are already there will continue to serve there and have the option of staying on with the Brigade or volunteering to join an infantry division in Britain or wherever the British Army is situated. After this year we shall commission only short service British officers into the permanent cadre. That is the same basis as the Corps which support the Rifle Regiments of the Brigade of Gurkhas. As I said in answer to a Question, this has been satisfactory in the past.
The Engineers, the Signals and the Transport Regiment of the Gurkhas are all officered by seconded and short service officers, and this has worked very well. I am sure that the new arrangements will also work well. There will be a considerable amount of opportunity for officers to exercise their own discretion and widen their experience. We believe that this will all work out to the good.
I hope that I have been able to reassure the hon. Member for Derbyshire, West on a number of his points. I cannot accept his general political case, either that his Party will be in a position to do anything about this matter for a considerable time, or the general implications of the political and military situation.
On the more narrow points of the Brigade of Gurkhas, I hope that I have been able to give him a little encouragement that we are doing all we can with the existing situation. As far as I know from personal observation and from the reports which I receive, the Brigade is very contented and the Gurkhas continue to give the excellent service which they have given to the British Government for a long time. They continue to do so in reasonable comfort and with excellent morale.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Twelve o'clock.